What is included in the 'Total Expenses' definition for a Christian Brothers Automotive franchise?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
(b) "Split Profits" shall mean (x) all monies, revenues and items of value from all sources generated in connection with and/or in any way related to the Franchised Business, minus (y) the Approved Expense Items (as defined below). "Approved Expense Items" shall mean (i) those expense items calculated under Generally Accepted Accounting Principles (GAAP) and approved by Franchisor as set forth in the Confidential Operations Manual, (ii) all subsequent written budget adjustments that are approved in writing by Franchisor, and (iii) all adjustments
Source: Item 23 — RECEIPTS (FDD pages 76–372)
What This Means (2025 FDD)
According to the 2025 Christian Brothers Automotive Franchise Disclosure Document, "Split Profits" are calculated by subtracting "Approved Expense Items" from all revenues generated by the franchised business.
"Approved Expense Items" are defined as those expenses calculated under Generally Accepted Accounting Principles (GAAP) and approved by Christian Brothers Automotive, as detailed in the Confidential Operations Manual. These items also include any subsequent written budget adjustments approved in writing by Christian Brothers Automotive.
For a prospective franchisee, this means that not all expenses are automatically deductible from revenue when calculating the royalty fee. Franchisees must adhere to GAAP and obtain approval from Christian Brothers Automotive for their expense items and any budget adjustments. This approval process ensures that only legitimate and agreed-upon expenses are used to calculate the "Split Profits" on which the royalty is based.