In the event of a breach by the franchisee, is Christian Brothers Automotive entitled to reasonable costs?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
Brothers Automotive Corporation
to ascertain and/or calculate accurately, and the proof of which would be burdensome and
costly, although such damages are real and meaningful to Franchisor and the System.
Accordingly, in the event that Franchisee breaches its obligations under Section 7 of this
Agreement or any covenant in Section 16 of this Agreement, Franchisee agrees to pay to
Franchisor a lump sum, which represents a fair and reasonable estimate of Franchisor's
foreseeable losses as a result of such a breach, and which is not in any way intended to be
a penalty, in an amount equal to the monthly average of the royalty fees paid (or payable)
(in accordance with Section 4.05 of this Agreement) over the past twelve (12) months times
forty-eight (48) months or the number of full calendar months remaining in the term of this
Agreement at the time of breach, whichever is less. If Franchisee has not operated the
Franchised Business for at least twelve (12) months at the time of termination, then the
average of the royalty fee payments will be calculated during the period that Franchisee
operated the Franchised Business. Franchisee's payment to Franchisor under this Section
will be in lieu of any direct monetary damages for a breach of Section 7 or any covenant
in Section 16 that Franchisor may incur as a result of Franchisor's loss of royalty fee
payments that would have been owed to Franchisor after the date of breach; however, such
payment shall be in addition to all damages and other amounts arising under this
Agreement, including, without limitation, damages arising from breach of the Franchisee's
obligations under other Sections of this Agreement, Franchisor's right to injunctive relief,
and any attorneys' fees and other costs and expenses to which Franchisor is entitled under
this Agreement. The foregoing shall be in addition to all other remedies available to
Franchisor under this Agreement and at law.
Source: Item 23 — RECEIPTS (FDD pages 76–372)
What This Means (2025 FDD)
According to Christian Brothers Automotive's 2025 Franchise Disclosure Document, if a franchisee breaches obligations under Section 7 (related to receipts) or any covenant in Section 16 (covenants not to compete) of the Franchise Agreement, the franchisee must pay Christian Brothers Automotive a lump sum. This sum is calculated as a fair and reasonable estimate of Christian Brothers Automotive's foreseeable losses due to the breach and is not intended as a penalty. The amount is equal to the monthly average of royalty fees paid (or payable) over the past 12 months, multiplied by 48 months or the number of full calendar months remaining in the agreement term at the time of the breach, whichever is less. If the franchisee has operated for less than 12 months, the average royalty fee is calculated based on the period of operation.
This payment covers Christian Brothers Automotive's loss of royalty fee payments that would have been owed after the breach. However, it is in addition to all other damages and amounts arising under the agreement, including damages from breaches of other sections, the right to injunctive relief, and any attorneys' fees and other costs and expenses Christian Brothers Automotive is entitled to under the agreement. This payment does not limit any other remedies available to Christian Brothers Automotive under the agreement or at law.
Additionally, if an inspection or audit determines that a Christian Brothers Automotive franchisee has failed to pay all amounts owed, the franchisee will pay all costs associated with the inspection or audit. They will also pay the amounts owed, along with interest at 18% per annum and any penalties provided by law or the terms of the agreement. This clause ensures that Christian Brothers Automotive can recover costs associated with enforcing the agreement and addressing franchisee non-compliance.