What is the 'Letter Agreement' referring to in the Christian Brothers Automotive Receipt and Acknowledgement Letter Agreement?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
Name]:
The purpose of this Receipt and Acknowledgement Letter Agreement (this "Letter Agreement") is to document the understanding between you and Christian Brothers Automotive Corporation ("CBAC") as of the date of this Letter Agreement. You are in the process of becoming a franchisee of CBAC, and you hereby agree to execute CBAC's then-current Franchise Agreement (or cause an entity formed and owned by you for the sole purpose of owning and operating the Franchise to execute CBAC's then-current Franchise Agreement) (the "Franchise Agreement") at a later date in accordance with the following terms. In connection with this process, you have requested that your CBAC franchise (the "Franchise") granted under the Franchise Agreement be located in the [Metropolitan Statistical Area] area (the "Location"). CBAC is in the process of identifying and purchasing Land or acquiring an Existing Business and is incurring expenses in connection with that purchase. "Land" means the land that will be purchased or leased for the construction of a building and other improvements that will be used for the operation of your franchise. "Existing Business" means an operating CBAC franchise business in the general market of the Location. 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, the Receipt and Acknowledgement Letter Agreement, also referred to as the "Letter Agreement," serves to formalize the understanding between the prospective franchisee and Christian Brothers Automotive Corporation as of the date of the agreement. This agreement is initiated when an individual is in the process of becoming a Christian Brothers Automotive franchisee.
The Letter Agreement stipulates that the franchisee agrees to execute Christian Brothers Automotive's current Franchise Agreement at a later date, or to ensure that an entity formed and owned by the franchisee does so. This execution will occur in accordance with the terms outlined in the Letter Agreement. As part of this process, the franchisee may request that their Christian Brothers Automotive franchise be located in a specific metropolitan area.
Christian Brothers Automotive, in turn, begins the process of identifying and purchasing land or acquiring an existing business in the requested location, incurring expenses in the process. To proceed with these arrangements, Christian Brothers Automotive requires the franchisee to pay $85,000 as a down payment of the initial Franchise Fee upon the execution of the Letter Agreement. It's important to note that $13,500 of this down payment is non-refundable, covering administrative expenses and lost opportunities for Christian Brothers Automotive.