When Christian Brothers Automotive exercises Step-In Rights, is the remedy in addition to other remedies available to Christian Brothers Automotive?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
If we exercise our Step-In Rights, then: (a) we will keep in a separate account all monies generated by the operation of the Franchised
Business, less the expenses of the Franchised Business, including reasonable compensation and expenses for our representatives (including an Interim Manager) as well as our other expenses; (b) you must agree to hold harmless us and our representatives for all actions occurring during the course of such temporary management of the Franchised Business and acknowledge that the Interim Manager and such representatives will have no liability to you except to the extent directly caused by the gross negligence or willful misconduct of us or the Interim Manager; (c) you agree to pay us a monthly management fee of $5,000.00 per month; (d) you agree to pay us (in addition to the management fee) all of our reasonable costs and expenses, including, but not limited to, attorneys' fees incurred as a consequence of exercising our Step-In Rights; and (e) you must acknowledge that we and our representatives (including an Interim Manager) will have a duty to utilize only commercially reasonable efforts in the operation of the Franchised Business and will not be liable for any debts, losses, damages, or obligations you or the Franchised Business incurs, or to any of your or the Franchised Business's suppliers, vendors or creditors for any supplies, products, or other assets or services you or the Franchised Business purchases, while managed by us or an Interim Manager. This remedy is in addition to other remedies available to us.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 57–58)
What This Means (2025 FDD)
According to Christian Brothers Automotive's 2025 Franchise Disclosure Document, when Christian Brothers Automotive exercises its Step-In Rights, this remedy is in addition to any other remedies that may be available to them. This means that exercising Step-In Rights does not prevent Christian Brothers Automotive from pursuing other legal or contractual remedies they might have against the franchisee.
Step-In Rights allow Christian Brothers Automotive to temporarily manage a franchise if the franchisee defaults, abandons the business, or becomes incapacitated. During this period, Christian Brothers Automotive will manage the business and keep all generated monies in a separate account, less expenses. These expenses include reasonable compensation for their representatives, including an Interim Manager, and other expenses incurred during the management period. The franchisee must also agree to hold harmless Christian Brothers Automotive and its representatives for actions taken during this temporary management, except in cases of gross negligence or willful misconduct.
Furthermore, the franchisee is responsible for paying Christian Brothers Automotive a monthly management fee of $5,000, in addition to all reasonable costs and expenses, including attorneys' fees, incurred as a result of exercising the Step-In Rights. Christian Brothers Automotive and its representatives are only required to utilize commercially reasonable efforts in operating the franchise and will not be liable for debts, losses, or damages incurred by the franchisee or the business during their management. This comprehensive set of conditions ensures that Christian Brothers Automotive can take necessary action to maintain the business's operations while also protecting their interests and recovering associated costs.