Can Christian Brothers Automotive apply payments to obligations under agreements other than the franchise agreement?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
4.04 Application of Funds. If Franchisee is delinquent in the payment of any obligation to Franchisor, its subsidiaries, affiliates or designees, then Franchisor (or such subsidiaries, affiliates or designees), will have the right to apply any payment from Franchisee to any obligation due, including the oldest obligation due, whether under this Agreement or otherwise, notwithstanding any contrary designation by Franchisee as to such application.
Source: Item 23 — RECEIPTS (FDD pages 76–372)
What This Means (2025 FDD)
According to the 2025 Christian Brothers Automotive Franchise Disclosure Document, Christian Brothers Automotive has the right to apply payments from a franchisee to any obligation due, including the oldest obligation due, whether under the Franchise Agreement or otherwise. This is applicable if the franchisee is delinquent in the payment of any obligation to Christian Brothers Automotive, its subsidiaries, affiliates, or designees.
This means that if a Christian Brothers Automotive franchisee owes money to Christian Brothers Automotive under any agreement (not just the franchise agreement itself), Christian Brothers Automotive can use any payment the franchisee makes to offset that debt. This is true regardless of whether the franchisee intended the payment to go towards that specific debt.
For a prospective franchisee, this clause highlights the importance of staying current on all financial obligations to Christian Brothers Automotive and its related entities. Failure to do so could result in payments being applied to debts the franchisee may not have prioritized, potentially leading to further financial complications. This is a fairly standard clause in franchise agreements, designed to protect the franchisor's financial interests.