Are there any exceptions to the nonsolicitation covenant for Caring Transitions customers and shared referral sources?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
cess client data from the Communication and Information System at any time. If a franchisee provides Permitted Products and Services in a franchise territory before Franchisor grants such territory to a new franchisee, then Franchisor may, in its discretion, allow the pre-existing franchisee to continue to provide Permitted Products and Services to pre-existing clients, but the pre-existing franchisee may not thereafter solicit or accept new clients in any part of the new franchisee's franchise territory.
- 1.7 Permitted Activities. The rights granted to Franchisee under this Agreement are limited to the sale of Permitted Products and Services to clients within the Territory. Franchisee shall not promote, offer, sell, provide, or distribute any other goods or services without Franchisor's prior written approval.
- 1.8 Reserved Rights of Franchisor. Franchisor specifically reserves all rights not expressly granted to Franchisee in this agreement.
- 1.9 Acquisition of Competing System. If Franchisor merges with, acquires, or is acquired by another system of businesses, the continued operation of any branch, franchise, or location of the other system within the Territory under any trade name, trademark, brand name, or commercial symbol other than the Marks will not violate the rights granted to Franchisee by section 1.3 or any other provision of this agreement.
- 1.10 Marketing and Solicitation Restrictions.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 41–49)
What This Means (2025 FDD)
According to Caring Transitions' 2025 Franchise Disclosure Document, there are specific stipulations regarding non-solicitation of customers and shared referral sources, with some exceptions. A franchisee is generally prohibited from soliciting or selling products or services to anyone who was a customer of the franchised business during the term of the agreement, and from soliciting referrals from Shared Referral Sources within the territory for two years after the agreement's expiration or termination. This restriction is in place to protect Caring Transitions' established customer base and referral networks. The two-year period can be extended if the franchisee violates the terms of the non-solicitation agreement.
However, the FDD also states that if a franchisee provides services in a territory before it is granted to a new franchisee, Caring Transitions may allow the pre-existing franchisee to continue serving pre-existing clients. The original franchisee is not allowed to solicit or accept new clients in the new franchisee's territory. This exception allows for continuity of service for existing clients during territory transitions, but it strictly prohibits the pre-existing franchisee from expanding their client base in the new territory.
Furthermore, the rights granted to a Caring Transitions franchisee do not include the exclusive right to solicit referrals from Shared Referral Sources. Other franchisees can solicit referrals from Shared Referral Sources within a franchisee's territory, and a franchisee can solicit referrals from Shared Referral Sources in another franchisee's territory. This acknowledges that Shared Referral Sources often operate across multiple territories and ensures that all franchisees have the opportunity to tap into these referral networks. A "Shared Referral Source" is defined as an entity that frequently recommends service providers similar to Caring Transitions, such as attorneys, real estate agents, or senior care facilities.