How are payments applied to outstanding balances for a Christian Brothers Automotive franchise?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
4.04 Application of Funds. If Franchisee is delinquent in the payment of any obligation to
Franchisor, its subsidiaries, affiliates or designees, then Franchisor (or such subsidiaries,
affiliates or designees), will have the right to apply any payment from Franchisee to any
obligation due, including the oldest obligation due, whether under this Agreement or
otherwise, notwithstanding any contrary designation by Franchisee as to such application.
Source: Item 23 — RECEIPTS (FDD pages 76–372)
What This Means (2025 FDD)
According to the 2025 Christian Brothers Automotive Franchise Agreement, if a franchisee is behind on any payments owed to Christian Brothers Automotive, its subsidiaries, affiliates, or designees, Christian Brothers Automotive has the right to apply any payment from the franchisee to any outstanding debt.
This means Christian Brothers Automotive can choose which obligation the payment covers, including the oldest outstanding obligation, regardless of any specific instructions from the franchisee about how to apply the payment. This applies whether the obligation is under the Franchise Agreement or any other agreement.
For a prospective franchisee, this clause emphasizes the importance of staying current on all financial obligations to Christian Brothers Automotive. If a franchisee falls behind, they lose control over how their payments are allocated, potentially leading to further complications or late fees on other outstanding balances. This is a fairly standard practice in franchising agreements, designed to protect the franchisor's financial interests.