What happens to the deposit paid by a Christian Brothers Automotive franchisee if the sale does not occur?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
ation. 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, prospective franchisees must pay a down payment of $85,000 towards the initial franchise fee when signing the Receipt and Acknowledgement Letter Agreement. However, $13,500 of this down payment is non-refundable.
This non-refundable portion is intended to cover Christian Brothers Automotive's administrative and other expenses, as well as to compensate for lost or deferred opportunities to enter into franchise agreements with other potential franchisees. This means that if the franchisee does not proceed with the franchise agreement, they will not receive a full refund of their initial deposit.
This arrangement is fairly common in the franchise industry, as franchisors often incur significant upfront costs when evaluating and preparing to onboard a new franchisee. The non-refundable portion of the deposit helps to offset these costs if the deal falls through. Prospective Christian Brothers Automotive franchisees should carefully consider this non-refundable amount before signing the Letter Agreement and making the down payment. It is important to be certain about their decision to proceed with the franchise, as they will lose a portion of their investment if they choose not to move forward.