What happens to the Caring Transitions Funds' earnings?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) The Funds, all contributions thereto, and any earnings thereon, shall be used exclusively to meet any and all costs of maintaining, administering, researching, directing and preparing advertising and/or promotional activities, developing new public relations campaigns and new advertising, promotional and marketing materials for the System and for franchisees in the System.
The Funds and all earnings thereof shall not otherwise inure to the benefit of Franchisor.
- (e) It is anticipated that all franchisee contributions to and earnings of the Funds will be spent for advertising and/or promotional purposes during the taxable year within which the contributions are made.
If, however, excess amounts remain in the Funds at the end of such taxable year, all expenditures in the following taxable year(s) shall be made first out of accumulated earnings from previous years, next out of earnings in the current year, and finally from contributions.
Although Franchisor intends the Funds to be of perpetual duration, Franchisor maintains the right to terminate any Fund.
No Fund may be terminated, however, until all moneys in the Fund have been expended for advertising and/or promotional purposes or returned to contributors on the basis of their respective contributions during the one-year period immediately preceding the termination.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 41–49)
What This Means (2025 FDD)
According to Caring Transitions' 2025 Franchise Disclosure Document, the earnings derived from the Caring Transitions National Branding Fund are specifically allocated for the benefit of the franchise system. These earnings, along with franchisee contributions, are to be used exclusively for covering the costs associated with maintaining, administering, researching, and directing advertising and promotional activities. This includes developing new public relations campaigns, as well as creating new advertising, promotional, and marketing materials designed to benefit both the overall Caring Transitions system and its individual franchisees. The funds and their earnings are not intended to benefit the Franchisor, except for reasonable salaries, overhead, and administrative, accounting, and legal costs related to managing the fund and advertising programs.
Caring Transitions anticipates that all franchisee contributions to the Funds and the earnings generated by those funds will be spent on advertising and promotional activities within the same taxable year they are contributed. However, if there are excess amounts remaining in the Funds at the end of the taxable year, expenditures in subsequent years will be made first from accumulated earnings from previous years, then from current year earnings, and finally from franchisee contributions. This ensures that the earnings are prioritized for use before tapping into new contributions.
While Caring Transitions intends for the Funds to be of perpetual duration, the franchisor retains the right to terminate any Fund. However, a Fund cannot be terminated until all the money within it has been fully spent on advertising and promotional purposes or returned to the contributors. The return of funds would be based on each franchisee's respective contributions during the one-year period immediately preceding the termination. This provision protects franchisees by ensuring that any remaining funds are used appropriately or returned to those who contributed.