Does Christian Brothers Automotive guarantee a franchisee's notes, leases, or other obligations?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
- g. Power to Contract. Franchisee has all necessary organizational power to own and hold its property and assets and to carry on its business as presently conducted, and it is duly and properly qualified to carry on its business in those jurisdictions where qualification is necessary for the conduct of its business;
- h. Performance Authority. Franchisee has all necessary legal power to enter into this Agreement and to perform its obligations hereunder and the execution and delivery of this Agreement and the completion of the transactions contemplated in this Agreement have been duly authorized by all necessary organizational actions on its part; and
- i. Legal Obligation. This Agreement constitutes a legal, valid and binding obligation of Franchisee enforceable in accordance with its terms.
Source: Item 10 — FINANCING (FDD pages 39–40)
What This Means (2025 FDD)
The 2025 Franchise Disclosure Document does not state that Christian Brothers Automotive guarantees a franchisee's notes, leases, or other obligations. The document outlines the obligations and rights of both the franchisee and franchisor, including the franchisee's responsibility to perform their obligations under the agreement. The franchisee is responsible for securing their own financing and fulfilling their financial commitments.
Item 23 of the Christian Brothers Automotive Franchise Agreement outlines various receipts and agreements, emphasizing the franchisee's legal and binding obligations. It also states that the franchisee has all necessary legal power to enter into the agreement and perform its obligations. This underscores the franchisee's independent responsibility for their financial and contractual obligations.
Prospective franchisees should carefully review the entire Franchise Disclosure Document and consult with legal and financial advisors to fully understand their financial obligations and risks associated with the franchise agreement. It is important to clarify with Christian Brothers Automotive whether there are any circumstances under which they might provide guarantees or financial support, although the FDD does not explicitly state this.