Are the Christian Brothers Automotive financial statements consolidated?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
To the Board of Directors of Christian Brothers Automotive Corporation
Opinion
We have audited the consolidated financial statements of Christian Brothers Automotive Corporation, which comprise the consolidated balance sheets as of December 31, 2024 and 2023, and the related consolidated statements of income, changes in shareholders' equity and cash flows for the years then ended, and the related notes to the consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Christian Brothers Automotive Corporation as of December 31, 2024 and 2023, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Notes to Consolidated Financial Statements December 31, 2024 and 2023
1. Nature of Operations and Significant Accounting Policies
Christian Brothers Automotive Corporation (CBAC or the Company), a Texas subchapter S corporation, is a national franchisor of automobile repair establishments located throughout the United States of America. CBAC was formed in August 1982 and had 302 and 281 independent franchises in operation at December 31, 2024 and 2023, respectively. In addition to franchising operations, CBAC engages in the business of investing in, owning and selling the real estate and facilities from which its franchise locations operate. These real estate sales are typically made to third parties, some of which are under saleleaseback agreements.
In September 2023, CBAC acquired 100% ownership of WWK Warranty and Administration LLC, (WWK). WWK, a wholly owned subsidiary of the Company, works in conjunction with dealerships to provide vehicle service contracts and maintenance coverage for their customers.
In March 2024, CBAC formed Nice Difference Care+ (Care+) to provide extended warranty services for repairs, maintenance and vehicle care at Christian Brothers Automotive franchise locations. Care+ is wholly owned by CBAC and have been consolidated within the financial statements of CBAC.
In August 2024, the Company entered a transaction to acquire a 44% ownership stake in Foedus Sui, LLC (Foedus), which is classified as a variable-interest entity. The Company holds a controlling interest in Foedus via its financial and contractual arrangements. As the primary beneficiary of Foedus, the Company consolidates Foedus in its consolidated financial statements.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 75)
What This Means (2025 FDD)
According to the 2025 Christian Brothers Automotive FDD, the financial statements are consolidated. The Independent Auditors' Report explicitly states that the audit covers the "consolidated financial statements of Christian Brothers Automotive Corporation." This includes consolidated balance sheets, statements of income, changes in shareholders' equity, and cash flows for the years ending December 31, 2024 and 2023.
The notes to the financial statements further clarify the basis of presentation and consolidation. Christian Brothers Automotive consolidates all wholly-owned subsidiaries and variable interest entities (VIEs) for which it is the primary beneficiary. This means that the financial performance and position of these entities are combined with those of Christian Brothers Automotive to provide a comprehensive view of the company's overall financial health. All significant intercompany transactions and balances are eliminated during this consolidation process.
Specifically, the FDD mentions that in September 2023, Christian Brothers Automotive acquired 100% ownership of WWK Warranty and Administration LLC (WWK), which is a wholly-owned subsidiary. Additionally, in March 2024, Christian Brothers Automotive formed Nice Difference Care+ (Care+), which is also wholly-owned. Both WWK and Care+ have been consolidated within the financial statements of Christian Brothers Automotive. In August 2024, the company acquired a 44% ownership stake in Foedus Sui, LLC, which is also consolidated in its financial statements.
For a prospective franchisee, this consolidation means that the financial statements presented offer a broader picture of Christian Brothers Automotive's financial stability and performance, encompassing its various subsidiaries and entities. Understanding the consolidated nature of these statements is crucial for assessing the overall risk and potential of investing in a Christian Brothers Automotive franchise.