How is the interest rate determined for Christian Brothers Automotive financing?

CBAC may offer unsecured financing for loans for remodels and renovations required by the Franchise Agreement. We do not require a security interest and we provide 100% financing. You will be required to sign a promissory note, but we will not take a security interest in any collateral in connection with the loan, nor will we require a personal or third-party guaranty. The period of repayment will vary depending on the loan amount and the circumstances of the franchisee. The current interest rate for all financing is the secured overnight financing rate as of two (2) business days prior to the loan date, as such rate is published by the Federal Reserve Bank of New York, and is subject to change. You are not required to waive defenses nor are you barred from asserting defenses under the current form of our promissory note. We may determine in our sole discretion whether to approve or disapprove any loan requests. Additional terms and conditions will be established by CBAC and agreed upon with each borrower. If any installment payment due under the loan is not timely received, the entire amount of unpaid principal will become immediately due and payable at our option without prior notice to you. A default under the promissory note will also be considered a default under the Franchise Agreement. It is not our current practice or intent to sell, assign or discount the promissory note to a third party.

Source: Item 10 — FINANCING (FDD pages 39–40)