What portion of the Down Payment for a Christian Brothers Automotive franchise is non-refundable?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
You must pay CBAC an initial franchise fee of $135,000 (the "Franchise Fee"). This Franchise Fee is paid in two installments. The first installment is in the amount of $85,000 (the "Down Payment") and is due at the earlier of your signing the Franchise Agreement or your signing the Receipt and Acknowledgement Letter Agreement (the "Letter Agreement"), a copy of which is attached as Exhibit H. The second installment is in the amount of $50,000 and is due 30 days
prior to receiving your Certificate of Occupancy, which is generally assumed to be approximately six weeks prior to store opening. If you are allowed to finance the second installment, depending on your personal circumstances and credit worthiness, it will be paid to CBAC upon the closing of your startup loan, which is typically closed 30 days prior to receiving your Certificate of Occupancy as this coincides with initial working capital needs. $13,500 of the Down Payment will be fully earned when paid and non-refundable in consideration of administrative and other expenses CBAC incurs and for lost or deferred opportunities to enter into the Franchise Agreement with others.
Within 30 days of you and CBAC's execution of the Letter Agreement, and before you sign the Franchise Agreement, CBAC will provide you with a Non-Use, Non-Disclosure and Non-Competition Agreement, a copy of which is attached as Exhibit F, for execution. After you have signed the Non-Use, Non-Disclosure and Non-Competition Agreement, CBAC will provide you with credentials to access CBAC's proprietary and confidential training materials and Confidential Operations Manual.
CBAC is a proud participant of the International Franchise Association's Veterans Transition Franchise Initiative and has established the following "IFA VetFran Program." If you are a current or former member of the United States Armed Forces and have been or will be honorably discharged then CBAC offers you a discount of 10% of the Franchise Fee. Upon receipt of your DD Form 214 "Certificate of Release or Discharge from Active Duty," CBAC will apply the discount to the second installment of the Franchise Fee.
CBAC agrees to identify Land (as defined below) for purchase and begin the process of negotiating a letter of intent for such purchase no later than one year following the date of the Letter Agreement. In the event CBAC fails to meet this deadline, you will have a thirty (30) day option to terminate your relationship with CBAC and have your Down Payment (minus the $13,500 non-refundable portion) returned. If you choose not to terminate your relationship with CBAC within this thirty (30) day period, your Franchise relationship with CBAC will continue, subject to the terms of the Letter Agreement. "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.
CBAC may not be able to purchase Land that you approve and CBAC has agreed to attempt to acquire. CBAC has the right to decline to purchase any Land for any reason whatsoever. CBAC agrees to notify you in writing if it determines, for any reason, that it will not purchase the Land.
Source: Item 5 — INITIAL FEES (FDD pages 14–17)
What This Means (2025 FDD)
According to the 2025 Christian Brothers Automotive Franchise Disclosure Document, a portion of the initial franchise fee is non-refundable. The initial franchise fee is $135,000, which is paid in two installments: a Down Payment of $85,000 and a second installment of $50,000 due 30 days prior to receiving the Certificate of Occupancy. Of the $85,000 Down Payment, $13,500 is non-refundable. This portion is considered fully earned by Christian Brothers Automotive upon payment to cover administrative and other expenses, as well as lost or deferred opportunities to enter into franchise agreements with other potential franchisees.
If a Termination Event occurs after Christian Brothers Automotive has executed a contract for land acquisition, the entire $85,000 Down Payment is deemed non-refundable. A Termination Event includes situations where the franchisee does not qualify for necessary financing, chooses not to proceed with opening a franchise on the designated land, or is unable to fulfill other obligations necessary for owning and operating the franchise.
However, if a Termination Event occurs before Christian Brothers Automotive executes a contract for land acquisition, Christian Brothers Automotive will deduct the $13,500 nonrefundable portion of the Down Payment, as well as any reasonable costs incurred in selecting the site and preparing for the franchise relationship. These deductions will not exceed $38,500, and any remaining balance of the Down Payment will be returned to the franchisee. If Christian Brothers Automotive terminates the Letter Agreement or franchise relationship due to inaccurate representations, failure to complete training, failure to pass background checks, or failure to perform pre-opening duties, the franchisee will receive a refund of the Down Payment, less the $13,500 non-refundable portion.