What happens if a Big O Tires franchisee has overpaid Big O Tires?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Because the Mold Depreciation and Big O I Tires warranty factors relate to just Big O I Tires, these two adjustment factors will be aggregated. In the event the aggregate amount is positive (i.e. franchisees have overpaid Big O), then the aggregate amount will be allocated among the Business Format Franchise Stores based on the Big O I Tires units they purchased from Big O while operating as a Business Format Franchise, and the amount so allocated with be paid to the Stores via a credit to their trade account with Big O. In the event the aggregate amount is negative (i.e., franchisees have underpaid Big O), then the aggregate amount will be included as a component of the Big O Program Product Prices for the following year as a separate component called "Prior Year True-Up--Big O I." The methodology for including such an amount in the Big O Program Product Prices for the following year will be done so as to fully recover the amount of the underpayment from the Business Format Franchise Stores.
- All of the other adjustment factors, if any, including the portion of any Excess Big O Tire Acquisition Cost that is allocated to tires sold to Business Format Franchise Stores, the Acquisition Cost of tires adjustment factor, the Rebill Charge adjustment factor, the DCPU adjustment factor and the other warranty expense adjustment factor, relate to all tire units sold by Big O to Business Format Franchise Stores, and will be aggregated. In the event the aggregate amount is positive (i.e., franchisees have overpaid Big O), then the aggregate amount will be allocated among the Business Format Franchise Stores based on the total tire units they purchased from Big O, and the amount so allocated will be paid to the Stores via a credit to their trade account with Big O. In the event the aggregate amount is negative (i.e., franchisees have underpaid Big O), then the aggregate amount will be included as a component of the Big O Program Product Prices for the following year as a separate component called "Prior Year True-Up--All Tires." The methodology for including such an amount in the Big O Program Product Prices for the following year will be done so as to fully recover the amount of the underpayment from Business Format Franchise Stores.
Source: Item 23 — RECEIPTS (FDD pages 102–535)
What This Means (2025 FDD)
According to Big O Tires' 2025 Franchise Disclosure Document, if franchisees have overpaid Big O Tires due to certain adjustment factors related to tire sales, the aggregate overpayment will be allocated among the Business Format Franchise Stores. This allocation is based on the total tire units each store purchased from Big O Tires.
Specifically, the amount allocated to each store will be paid to them via a credit to their trade account with Big O Tires. This means that the franchisee will see a reduction in their outstanding balance with Big O Tires, effectively reimbursing them for the overpayment.
This process applies to overpayments related to factors like Mold Depreciation and Big O I Tires warranty. Big O Tires will aggregate these adjustment factors, and if the total is positive (indicating an overpayment), the credit will be applied to the franchisee's account. Conversely, if franchisees have underpaid Big O Tires, the underpayment will be included as a component of the Big O Program Product Prices for the following year, under a separate component called "Prior Year True-Up--Big O I" or "Prior Year True-Up--All Tires," to fully recover the amount.