Are all sums paid by Caring Transitions franchisees to the Funds maintained in a separate account?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
d" or such other designation as Franchisor may from time to time prescribe. All sums paid by Franchisee to the Funds shall be maintained in an account separate from the other moneys of Franchisor. Franchisee contributions may not be used to defray any of Franchisor's operating expenses, except for such reasonable salaries, overhead, and administrative, accounting, legal (including, without limitation, the defense of any claims against Franchisor and/or Franchisor's designee regarding the management of the Funds) and other costs, if any, as Franchisor may incur in activities reasonably related to the administration or direction of the Funds or advertising programs for Caring Transitions franchisees, including the costs of enforcing contributions to the Funds required under this agreement and the costs of preparing a statement of operations. 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.
- (f) Franchisor (and any designee of Franchisor) shall not have any direct or indirect liability or obligation to Franchisee, to the Funds, or otherwise with respect to the management, maintenance, direction, or administration of the Funds. Franchisor is not liable for any act or
omission, whether with respect to the Funds or otherwise, that is consistent with this agreement or other information provided to Franchisee, or that is done in subjective good faith.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 41–49)
What This Means (2025 FDD)
According to Caring Transitions' 2025 Franchise Disclosure Document, all sums paid by franchisees to the Funds are maintained in an account separate from the other monies of the Franchisor. These franchisee contributions cannot be used to cover Caring Transitions' operating expenses, except for reasonable salaries, overhead, administrative, accounting, and legal costs associated with managing the Funds or advertising programs. These expenses also include the costs of enforcing contributions to the Funds and preparing statements of operations.
The Funds and any earnings from them cannot benefit Caring Transitions, ensuring that the money is used for the intended purposes. 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 in which the contributions are made. If there are excess amounts at the end of the taxable year, expenditures in the following years will first be made from accumulated earnings from previous years, then from current year earnings, and finally from contributions.
Caring Transitions intends for the Funds to be of perpetual duration but retains the right to terminate any Fund. However, a Fund cannot be terminated until all monies have been spent for advertising and/or promotional purposes or returned to contributors based on their contributions during the one-year period immediately preceding the termination. This ensures that franchisees' contributions are used appropriately and for the benefit of the Caring Transitions system.