What is the purpose of the buyer's premium for Caring Transitions?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
chise Agreement § 6.1).
A "buyer's premium" is a fee paid by winning bidders for items won on our online auction website, www.CTBids.com. The buyer's premium defrays our costs in providing, operating, and maintaining CTBids.com and the franchisee's costs in conducting the auction, but there are no specific restrictions on its use. It is calculated as a percentage of the winning bid. For example, if an auction is won for $50 and the buyer's premium is 18%, the winning bidder will pay a buyer's premium of $9 (that is, 18% of $50). From the buyer's premium, (a) we will receive an amount equal to 3% of the winning bid ($1.50 in the above example) during a franchisee's first two years of operation and the franchisee will receive the balance of the buyer's premium ($7.50 in the above example); (b) we will receive 4% of the winning bid during the third year of operation and the franchisee will receive the balance; (c) we will receive 5% of the winning bid during the fourth year of operation and the franchisee will receive the balance; and (d) we will receive 6% of the winning bid during the sixth through tenth years of operation and the franchisee will receive the balance. Note: this is an example only and is not to be construed as a projection or estimate of actual or potential earnings, sales or receipts. We have the right, in our sole discretion, to establish a maximum and minimum buyer's premium. Presently we intend to set a maximum and recommended buyer's premium of 18%. We reserve the right to modify this policy after providing 30 days' notice but the amount of the buyer's premium that we receive will not exceed 6% of the winning bid. We did not derive any revenue from the buyer's premium in calendar year 2024. We do not otherwise presently set minimum or maximum prices at which you must sell products or services or otherwise assist in establishing prices although we reserve the right to do so. We may provide assistance with providing equipment, signs, fixtures, and supplies by providing the names of approved suppliers. We do not presently provide written specifications for such items and do not deliv
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 22–29)
What This Means (2025 FDD)
According to Caring Transitions' 2025 Franchise Disclosure Document, a buyer's premium is a fee that winning bidders pay for items they win on Caring Transitions' online auction website, CTBids.com. The primary purpose of this premium is to defray the costs associated with providing, operating, and maintaining the CTBids.com platform. Additionally, it helps cover the franchisee's costs related to conducting the auction. The buyer's premium is calculated as a percentage of the winning bid amount.
For example, if an auction item is won for $50 and the buyer's premium is set at 18%, the winning bidder will pay an additional $9 (18% of $50) as the buyer's premium. The distribution of this premium is structured so that Caring Transitions receives a portion, and the franchisee receives the balance. During the franchisee's first two years, Caring Transitions receives 3% of the winning bid, increasing to 4% in the third year, 5% in the fourth year, and 6% from the sixth through tenth years. The franchisee retains the remaining portion of the buyer's premium.
Caring Transitions retains the right to establish both maximum and minimum buyer's premiums, with a currently intended maximum and recommended premium of 18%. While Caring Transitions can modify this policy with 30 days' notice, their share of the buyer's premium will not exceed 6% of the winning bid. It is important to note that the example provided in the FDD is for illustrative purposes only and should not be interpreted as a projection or guarantee of actual earnings, sales, or receipts. The FDD states that Caring Transitions did not derive any revenue from the buyer's premium in calendar year 2024.