Under what condition is the Caring Transitions transfer fee not payable?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
| Name of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Transfer Fee – Note 1 | The greater of either $15,000 or 10% of the purchase price, plus legal and administrative costs | Prior to consummation of transfer | Payable when you sell your franchise to, among other things, cover the expenses of training the franchise purchaser; no transfer fee is payable for transfers to a company you form for the convenience of ownership |
Source: Item 6 — OTHER FEES (FDD pages 13–16)
What This Means (2025 FDD)
According to Caring Transitions's 2025 Franchise Disclosure Document, a transfer fee is generally required when a franchisee sells their franchise. This fee is the greater of $15,000 or 10% of the purchase price, in addition to legal and administrative costs. This fee covers Caring Transitions's expenses for training the new franchise purchaser.
However, the FDD specifies an exception to this rule. The transfer fee is not payable if the franchise is transferred to a company that the franchisee forms for ownership convenience. This means that if a franchisee initially signs the franchise agreement as an individual and then later incorporates their business, the transfer of the franchise to the newly formed corporation would not incur a transfer fee.
This exception can be beneficial for franchisees who initially operate as sole proprietors but later decide to incorporate for liability or tax reasons. It allows them to restructure their business without incurring a significant fee, making it easier to manage the business's legal and financial aspects as it grows. Franchisees should consult with legal and financial advisors to determine the best ownership structure for their specific circumstances.