After termination or expiration of a Caring Transitions franchise, for how long are franchisees prohibited from soliciting referral sources?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement | Summary |
|---|---|---|
| r. Non-competition covenants after the franchise is terminated or expires | 7.20, 15.3, 15.4 & 15.10 | No involvement in business that competes with Caring Transitions for 2 years in or within 15 miles of any franchisee's territory (subject to state law) , no solicitation of customers for 2 years, no solicitation of referral sources in or within 15 miles of any franchise territory for 2 years (subject to state law). |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 34–36)
What This Means (2025 FDD)
According to Caring Transitions's 2025 Franchise Disclosure Document, a franchisee is restricted from soliciting referral sources after the termination or expiration of the franchise agreement. Specifically, the franchisee is prohibited from soliciting referral sources in or within 15 miles of any franchise territory for a period of 2 years. This restriction is subject to state law, meaning the enforceability and specific terms may vary depending on the state where the franchise is located.
This non-solicitation clause is designed to protect Caring Transitions's existing franchisee network and the goodwill associated with the brand. By preventing former franchisees from soliciting referral sources, Caring Transitions aims to maintain the integrity of its referral network and prevent unfair competition. Referral sources are crucial for businesses like Caring Transitions, as they often provide a steady stream of potential clients.
For a prospective franchisee, this restriction means that upon exiting the Caring Transitions system, they cannot actively seek business from referral sources they may have developed relationships with during their time as a franchisee. This could impact their ability to start a similar business or transition to a competing brand in the same geographic area. It is important to note that the restriction applies not only within the former franchisee's territory but also within a 15-mile radius of any other Caring Transitions franchise territory.
Given that the non-solicitation clause is subject to state law, prospective franchisees should consult with legal counsel to understand the specific enforceability and limitations of this provision in their state. They should also consider the potential impact of this restriction on their future business plans should they decide to leave the Caring Transitions system.