Are there specific restrictions on how the buyer's premium is used by Caring Transitions or the franchisee?
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 premiu
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, the buyer's premium, which is a fee paid by winning bidders on the online auction website CTBids.com, is used to defray the costs of operating and maintaining the website for both Caring Transitions and its franchisees. However, there are no specific restrictions on how the buyer's premium is used beyond covering these costs. The buyer's premium is calculated as a percentage of the winning bid. As an 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.
The allocation of the buyer's premium between Caring Transitions and the franchisee varies over time. During the franchisee's first two years of operation, Caring Transitions receives 3% of the winning bid (e.g., $1.50 on a $50 winning bid), and the franchisee receives the balance (e.g., $7.50). In the third year, Caring Transitions receives 4% of the winning bid, with the franchisee receiving the remainder. This increases to 5% for Caring Transitions in the fourth year, and 6% from the sixth through tenth years, with the franchisee receiving the balance.
Caring Transitions retains the right to establish a maximum and minimum buyer's premium, with a present intention to set a maximum and recommended buyer's premium of 18%. While Caring Transitions can modify this policy with 30 days' notice, the amount they receive will not exceed 6% of the winning bid. The document states that Caring Transitions did not derive any revenue from the buyer's premium in calendar year 2024.