When is the Down Payment considered fully earned and non-refundable by Christian Brothers Automotive?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
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- In the event a Termination Event occurs after CBAC has executed a Contract, then CBAC will retain all of the $85,000 Down Payment, which amount shall be deemed nonrefundable in consideration of administrative and other expenses CBAC has incurred.
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- If no Termination Event occurs, you acknowledge that you (or an entity formed and owned by you for the sole purpose of owning and operating the Franchise) will execute the Franchise Agreement and pay the remaining amount of your Franchise Fee as provided in the Franchise Agreement no later than thirty days prior to receiving the Certificate of Occupancy for the building where you will operate the Franchise. Except for Section 8 and this Letter Agreement, upon execution the Franchise Agreement will supersede this Letter Agreement.
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- If at any time prior to the opening date of your franchise, CBAC determines (a) any of your representations or warranties prove to be inaccurate or false, (b) you fail to take, successfully complete and pass any of our required training, (c) you fail to submit to or pass any credit, character or background check performed by or on behalf of CBAC, and/or (d) you fail to timely or diligently perform any duties or obligations during the period prior to opening, then CBAC has the right to immediately terminate this Letter Agreement, the Franchise relationship and/or the Franchise Agreement, in which event CBAC will refund your Down Payment less the $13,500 non-refundable p
Source: Item 22 — CONTRACTS (FDD page 76)
What This Means (2025 FDD)
According to the 2025 Christian Brothers Automotive Franchise Disclosure Document, the $85,000 down payment becomes non-refundable under specific circumstances. Initially, $13,500 of the down payment is non-refundable to cover Christian Brothers Automotive's administrative and other expenses, as well as lost opportunities. However, the entire $85,000 down payment becomes non-refundable if a Termination Event occurs after Christian Brothers Automotive has executed a contract related to securing a location for the franchise.
A 'Termination Event' isn't defined in this section, but it implies a situation where the agreement is terminated due to franchisee-related issues or breaches after Christian Brothers Automotive has already committed resources. This could include purchasing land or acquiring an existing business for the franchise location. If such an event occurs, Christian Brothers Automotive retains the entire down payment to offset the expenses they've incurred.
However, if no Termination Event occurs, the franchisee is expected to execute the Franchise Agreement and pay the remaining franchise fee amount no later than thirty days before receiving the Certificate of Occupancy for their building. Christian Brothers Automotive also has the right to terminate the Letter Agreement if any representations or warranties made by the franchisee prove inaccurate or false, if the franchisee fails to complete required training or pass necessary checks, or if the franchisee fails to perform their duties diligently prior to opening. In these cases, Christian Brothers Automotive will refund the down payment, less the $13,500 non-refundable portion.
Prospective franchisees should carefully consider these conditions and seek clarification on what constitutes a 'Termination Event' to fully understand the circumstances under which they could lose the entire down payment. Understanding these terms is crucial before signing the Receipt and Acknowledgement Letter Agreement and making the initial $85,000 payment.