How often does Christian Brothers Automotive calculate a 'true up' on the annual Split Profits?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
You will pay a "Royalty Fee" of 50% of monthly "Split Profits" (as defined below) to CBAC each month during the initial term of your Franchise Agreement and during the remainder of all terms of your Franchise Agreement, including all extension and renewal periods. This payment is due on the last day of each succeeding month, and is based on the "Split Profits" estimated for the preceding month. Estimated payments will be due monthly and a final reconciliation will be calculated at each year end for a "true up" on the annual "Split Profits". "Split Profits" shall mean 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 the Approved Expense Items.
Source: Item 6 — OTHER FEES (FDD pages 17–25)
What This Means (2025 FDD)
According to Christian Brothers Automotive's 2025 Franchise Disclosure Document, the royalty fee is 50% of monthly Split Profits. Christian Brothers Automotive estimates payments monthly, but will calculate a final reconciliation at each year end for a 'true up' on the annual Split Profits.
This means that while franchisees make royalty payments to Christian Brothers Automotive based on estimated Split Profits each month, the actual Split Profits are calculated at the end of the year. This 'true up' ensures that the franchisee pays the correct amount in royalties based on the actual performance of the business.
The 'true up' process is important for franchisees as it provides an opportunity to reconcile any discrepancies between the estimated and actual Split Profits. If the estimated payments were too low, the franchisee will owe additional royalties at the end of the year. Conversely, if the estimated payments were too high, the franchisee may receive a credit or refund. Franchisees should carefully track their Split Profits throughout the year to ensure that their estimated payments are accurate and to avoid any surprises at the end of the year.