What payments are excluded from reducing Big O Tires' 'Acquisition Costs'?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
A. Acquisition Costs.
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- Big O's current policy is to not increase the Acquisition Cost component of prices for tires until 45 days after a price increase goes into effect. (For example, if Big O is informed of a price increase on certain SKUs on February 1 that will go into effect with purchases made starting March 1, Big O will not increase the Acquisition Cost component of the tire price for the SKUs impacted by the price increase until April 15, and will increase the price of all SKUs affected by the price increase on that same date.).
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- The 45-day delay in applying a price increase will be evaluated by Big O from time to time to determine if it should be adjusted.
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- The 45-day delay in applying a price increase will not apply to rebill tires since these are not products stocked by Big O. Accordingly, the Acquisition Cost for rebill tires will be the price billed to Big O from the rebill vendor.
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- For purposes of applying the 45-day delay in adjusting pricing discussed above, the specific date communicated by the manufacturer as being the effective date of a price increase will determine the date that an increase in Acquisition Costs will go into effect. In addition, price increases that do not have an effective date of the first of a month will be rounded to the nearest first of a month (i.e., a price increase communicated by a manufacturer as being effective on a date between the 2nd and the 15th of the month will be treated for purposes of this provision as being effective on the 1st of the month, and a price increase communicated by a manufacturer as being effective on a date between the 16th and the 31st of the month will be treated for purposes of this provision as being effective on the 1st of the following month).
Source: Item 23 — RECEIPTS (FDD pages 102–535)
What This Means (2025 FDD)
According to Big O Tires' 2025 Franchise Disclosure Document, the 45-day delay in applying a price increase will not apply to rebill tires, as these are not products stocked by Big O Tires. The acquisition cost for rebill tires will be the price billed to Big O Tires from the rebill vendor.
Big O Tires' current policy is to delay increasing the Acquisition Cost component of tire prices for 45 days after a price increase takes effect. For instance, if Big O Tires is notified on February 1st of a price increase on certain SKUs effective March 1st, the Acquisition Cost component for those SKUs won't increase until April 15th. This delay is subject to evaluation and adjustment by Big O Tires over time.
For price increases without a specified effective date, Big O Tires will round to the nearest first of the month. Increases effective between the 2nd and 15th of a month are treated as effective on the 1st, while those effective between the 16th and 31st are considered effective on the 1st of the following month. This policy ensures a consistent approach to acquisition cost adjustments, except in the case of rebill tires, where the cost is directly passed through without the 45-day delay.