How does the Christian Brothers Automotive lease term letter affect the monthly rent amount?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
n. Tenant will take possession of the Premises within five days of receiving notice that the Premises are Substantially Completed (as such term is defined in the Master Lease).
5. Payment of Rent.
- a. Tenant will pay Lessor the following amounts during the following periods: (a) $22,000- $36,000 per month for the first one year period of this Lease (the exact amount will be as Lessor notifies Tenant in the Lease Term Letter) commencing on the Commencement Date (subject to the provisions of subsection (e), below) and on the first day of each calendar month thereafter; and (b) on each one year anniversary of this Lease, the rent for the next one year period of this Lease will be established by increasing the amount of the rent that was paid for the previous one year period by one and one-half percent. For example, at the end of the first year of the Lease, the rent paid for the initial one year period will be multiplied by one hundred and one and one-half percent and the product will become the rent for the next one year period (x multiplied by 101.5% = y; where x = rent for previous one year period and y = rent for subsequent one year period); at the end of the second one year period, the rent for that period will be multiplied by one hundred and one and one-half percent and the product will become the r
Source: Item 23 — RECEIPTS (FDD pages 76–372)
What This Means (2025 FDD)
According to the 2025 Christian Brothers Automotive Franchise Disclosure Document, the exact monthly rent for the first year of the lease is determined by the Lease Term Letter. The monthly rent will be between $22,000 and $36,000. Christian Brothers Automotive, as the lessor, will notify the tenant (franchisee) of the specific amount in the Lease Term Letter.
After the first year, the rent increases by one and one-half percent (1.5%) annually. This increase is calculated by multiplying the previous year's rent by 101.5%. This new amount becomes the rent for the subsequent year. This process continues at the end of each year throughout the lease term, including any renewals or extensions, to determine the rent for the upcoming year.
For a prospective Christian Brothers Automotive franchisee, this means the initial monthly rent can vary significantly based on the terms outlined in the Lease Term Letter. It is important to carefully review this letter to understand the specific rent amount for the first year and to factor in the annual 1.5% increase when projecting future operating costs. Understanding these lease terms is crucial for financial planning and assessing the overall profitability of the franchise.