What happens to a Caring Transitions franchisee's obligations during the Holdover Period?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
ents specifically designed for renewing franchisees.
- 2.3 Holdover Period. If Franchisee does not sign a Successor Agreement before the Expiration Date but continues to operate the Franchised Business (or a competitive business) or to otherwise accept the benefits of this Agreement after the Expiration Date, then at Franchisor's option, this Agreement may be treated either as: (i) expired as of the Expiration Date, with Franchisee thereafter operating without a license to do so and in violation of Franchisor's rights; or (ii) continued on a monthto-month basis (the "Holdover Period") until either party provides the other party with at least one month's written notice of that party's intention to terminate the Holdover Period (if the laws of the jurisdiction in which the Franchised Business or Franchisee is located require a longer notice period, the one-month period will be deemed modified to be the shortest notice period required by the applicable laws of the jurisdiction). In the latter case, all of Franchisee's obligations will remain in full force and effect during the Holdover Period as if this Agreement had not expired, and all obligations and restrictions imposed on Franchisee upon the expiration of this Agreement will be deemed to take effect
upon the termination of the Holdover Period. Except as described in this section, Franchisee has no right to continue to operate the Franchised Business after the Expiration Date. If Franchisee does not sign a Successor Agreement before the Expiration Date but Franchisor nevertheless permits Franchisee to renew the license granted under this Agreement, then Franchisee must pay to Franchisor a fee of $1,000 per month for every month of
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 41–49)
What This Means (2025 FDD)
According to Caring Transitions's 2025 Franchise Disclosure Document, a "Holdover Period" occurs if a franchisee continues to operate the franchised business after the expiration date of the franchise agreement but has not signed a Successor Agreement. In this situation, Caring Transitions has the option to treat the agreement as expired, meaning the franchisee operates without a license and in violation of Caring Transitions's rights. Alternatively, Caring Transitions can allow the franchise to continue on a month-to-month basis.
If Caring Transitions chooses to allow a month-to-month continuation, all of the franchisee's obligations remain in full force and effect during the Holdover Period, as if the original agreement had not expired. All obligations and restrictions imposed on the franchisee upon expiration of the agreement will instead take effect upon the termination of the Holdover Period.
Furthermore, if the franchisee does not sign a Successor Agreement before the Expiration Date but Caring Transitions permits the franchisee to renew the license, the franchisee must pay Caring Transitions a fee of $1,000 per month for every month of the Holdover Period, up to the then-current initial franchise fee. This means a franchisee could potentially owe a substantial amount during this period, depending on how long it lasts and the initial franchise fee at that time. Franchisees have no right to continue operating the Caring Transitions business after the Expiration Date, except as described in the agreement.