After termination of the Caring Transitions franchise agreement, can the franchisee solicit referrals for moving management, estate liquidation or household liquidation services from Shared Referral Sources?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
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15.3 Covenants After Termination of Franchise Agreement.
- (a) Except as otherwise approved in writing by Franchisor, Franchisee shall not, for a continuous and uninterrupted period commencing upon the expiration, termination, or transfer of this Agreement (regardless of the cause for termination) and continuing for two (2) years thereafter, directly or indirectly, for itself or through, on behalf of, or in conjunction with any person (including a spouse, child, parent, or sibling of Franchisee or of a principal of Franchisee), partnership, limited liability company, corporation, or other entity:
- (1) own, maintain, operate, engage in, or have any interest in any business offering moving management, estate liquidation or household liquidation services, or any other services that had been offered by the franchised business, that is or is intended to be located or which operates in or within 15 miles of the geographical boundaries of Franchisee's Territory or within 15 miles of the geographical boundaries any Caring Transitions franchisee's Territory; or
- (2) promote, sell, procure, provide or solicit referrals for, or offer to sell, procure, provide or solicit referrals for, moving management, estate liquidation or household liquidation services, any Permitted Products and Services, or any other services that are offered in the franchised business, from any Shared Referral Sources (as defined in Section 8.7 above) or in or within 15 miles of the geographical boundaries of
Franchisee's Territory or in or within 15 miles of any other Caring Transitions franchisee's Territory.
- (b) Subparagraphs (a)(1) and (a)(2) above are severable and contain different but overlapping restrictions that shall be enforced simultaneously whenever permitted by applicable law. If any of those subparagraphs is held to be invalid or unenforceable in any respect, then such provision is to be modified to the extent necessary to permit its enforcement, and the remaining provisions will be unaffected thereby.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 41–49)
What This Means (2025 FDD)
According to Caring Transitions' 2025 Franchise Disclosure Document, a franchisee is restricted from soliciting referrals for moving management, estate liquidation, or household liquidation services from Shared Referral Sources for two years after the termination of the franchise agreement. This restriction applies regardless of the reason for termination. This means that for a period of two years, a former Caring Transitions franchisee cannot actively seek or promote these specific services to Shared Referral Sources within or within 15 miles of their former territory or any other Caring Transitions franchise territory.
A "Shared Referral Source" is defined as an entity that frequently recommends services similar to those offered by Caring Transitions, such as attorneys, bank trust departments, publications of general circulation, real estate agents and brokers, funeral homes, and senior care facilities. The franchisor, Caring Transitions, retains the sole right to identify Shared Referral Sources. This restriction is in place to protect Caring Transitions' business interests and those of its franchisees by preventing a former franchisee from leveraging established referral networks to compete with the brand shortly after leaving the system.
This non-solicitation clause is intended to prevent unfair competition by a former franchisee using the goodwill and relationships built during their time with Caring Transitions. The FDD specifies that the restrictions are considered reasonable and necessary to protect the franchisor's business interests. The franchisee acknowledges this reasonableness in the franchise agreement. The agreement also states that any violation of this restriction can extend the two-year non-solicitation period, adding further disincentive to breach the agreement.
Prospective franchisees should be aware of these post-termination restrictions and factor them into their decision-making process. Understanding the scope and duration of these covenants is crucial for planning future business activities after potentially leaving the Caring Transitions system. Franchisees should also seek clarification from the franchisor regarding the specific definition and identification of Shared Referral Sources to ensure full compliance with the agreement.