What happens to the Caring Transitions Funds if contributions are made during the taxable year?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 41–49)
What This Means (2025 FDD)
According to Caring Transitions' 2025 Franchise Disclosure Document, 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. This means Caring Transitions aims to use the funds contributed within the same year they are received.
However, if there are excess amounts remaining in the Funds at the end of the taxable year, the FDD states that 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. This outlines a specific order in which the funds are to be used if there is a surplus at the end of the year.
This policy ensures that franchisee contributions are primarily used for their intended purpose which is advertising and promotion. The stipulation regarding the order of expenditure in subsequent years provides clarity on how any unspent funds are managed, which could be a reassuring factor for prospective Caring Transitions franchisees.