What is the 'Franchise Agreement' referring to in the Christian Brothers Automotive Receipt and Acknowledgement Letter Agreement?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
Name]:
The purpose of this Receipt and Acknowledgement Letter Agreement (this "Letter Agreement") is to document the understanding between you and Christian Brothers Automotive Corporation ("CBAC") as of the date of this Letter Agreement. You are in the process of becoming a franchisee of CBAC, and you hereby agree to execute CBAC's then-current Franchise Agreement (or cause an entity formed and owned by you for the sole purpose of owning and operating the Franchise to execute CBAC's then-current Franchise Agreement) (the "Franchise Agreement") at a later date in accordance with the following terms. In connection with this process, you have requested that your CBAC franchise (the "Franchise") granted under the Franchise Agreement be located in the [Metropolitan Statistical Area] area (the "Location"). CBAC is in the process of identifying and purchasing Land or acquiring an Existing Business and is incurring expenses in connection with that purchase. "Land" means the land that will be purchased or leased for the construction of a building and other improvements that will be used for the operation of your franchise. "Existing Business" means an operating CBAC franchise business in the general market of the Location. In order to proceed, CBAC and you have agreed that you will pay $85,000 (the "Down Payment") of the initial Franchise Fee under the Franchise Agreement upon the execution of this Letter Agreement. You hereby acknowledge and agree that $13,500 of the Down Payment is non-refundable in consideration of administrative and other expenses CBAC incurs and for lost or deferred opportunities to enter into a franchise agreement with
Source: Item 22 — CONTRACTS (FDD page 76)
What This Means (2025 FDD)
According to the 2025 Christian Brothers Automotive Franchise Disclosure Document, the 'Franchise Agreement' referenced in the Receipt and Acknowledgement Letter Agreement is the agreement that a prospective franchisee will eventually sign to operate a Christian Brothers Automotive franchise. The Receipt and Acknowledgement Letter Agreement documents the understanding between the prospective franchisee and Christian Brothers Automotive Corporation as they move towards finalizing the franchise agreement.
The Receipt and Acknowledgement Letter Agreement outlines the terms under which the franchisee will eventually execute Christian Brothers Automotive's then-current Franchise Agreement. This includes the possibility of the franchisee forming an entity for the sole purpose of owning and operating the franchise. The agreement also specifies that the franchise will be located in a particular Metropolitan Statistical Area.
As part of this initial agreement, the franchisee agrees to pay $85,000 as a down payment of the initial Franchise Fee upon execution of the Letter Agreement. It's important to note that $13,500 of this down payment is non-refundable to cover Christian Brothers Automotive's administrative and other expenses, as well as lost opportunities to franchise with others. This arrangement allows Christian Brothers Automotive to begin incurring expenses related to identifying and purchasing land or acquiring an existing business for the franchise location.