How is rent generally determined for a real estate sublease with Big O Tires, and can it change?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
Note 10: Real Estate Sublease: Subject to change by Big O in its discretion, your rent will generally be: (1) market rates as determined by Big O, or (ii) Big O's cost plus a 5 percent mark-up. Initial rental rates are generally subject to increase on a periodic basis. Big O has the right to establish a new rent based on the fair market rental value of the property every five years. Improvements to the leased facility made by us will require additional rent sufficient to amortize the improvements plus provide return on the investment. Liability Upon Default: Loss of security deposit; termination of sublease; liability to Big O for all damages suffered and/or costs incurred as a result of default; late fees; interest; cost of collection
Source: Item 10 — FINANCING (FDD pages 48–55)
What This Means (2025 FDD)
According to Big O Tires' 2025 Franchise Disclosure Document, the rent for a real estate sublease is generally based on market rates as determined by Big O Tires, or Big O Tires' cost plus a 5 percent mark-up. These rates are subject to change at Big O Tires' discretion.
Specifically, Big O Tires has the right to establish a new rent based on the fair market rental value of the property every five years. Furthermore, if Big O Tires makes improvements to the leased facility, the franchisee's rent will increase to cover the amortization of these improvements plus a return on the investment.
It is important for a prospective Big O Tires franchisee to understand that the rental rates can change and are ultimately determined by Big O Tires. This could impact the franchisee's profitability and overall financial stability. The franchisee should review Sublease Exhibit F for more details and discuss these terms with Big O Tires before signing the franchise agreement.