How does Christian Brothers Automotive define Level 3 inputs within its fair value measurements?

According to the 2025 Christian Brothers Automotive Franchise Disclosure Document, Level 3 inputs are defined as unobservable inputs where there is little or no market data available. In these instances, Christian Brothers Automotive makes its own assumptions about how market participants would price the assets and liabilities. This approach is used when determining the fair value of financial instruments.

This means that when assessing the value of certain assets or liabilities, Christian Brothers Automotive relies on its own judgment and internal data rather than external market data. This can occur when there isn't an active market or readily available pricing information for the specific asset or liability in question.

For a prospective franchisee, this definition is important because it highlights the potential for subjectivity in the valuation of certain financial instruments. While the company aims to make reasonable assumptions, the lack of observable market data introduces an element of uncertainty. Franchisees should understand that these valuations are estimates and may not reflect the actual amounts realized upon disposition of the financial instruments.