Does Christian Brothers Automotive require a security interest in any collateral for the remodel and renovation loan?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
CBAC may offer unsecured financing for loans for remodels and renovations required by the Franchise Agreement. We do not require a security interest and we provide 100% financing. You will be required to sign a promissory note, but we will not take a security interest in any collateral in connection with the loan, nor will we require a personal or third-party guaranty. The period of repayment will vary depending on the loan amount and the circumstances of the franchisee. The current interest rate for all financing is the secured overnight financing rate as of two (2) business days prior to the loan date, as such rate is published by the Federal Reserve Bank of New York, and is subject to change. You are not required to waive defenses nor are you barred from asserting defenses under the current form of our promissory note. We may determine in our sole discretion whether to approve or disapprove any loan requests. Additional terms and conditions will be established by CBAC and agreed upon with each borrower. If any installment
payment due under the loan is not timely received, the entire amount of unpaid principal will become immediately due and payable at our option without prior notice to you. A default under the promissory note will also be considered a default under the Franchise Agreement. It is not our current practice or intent to sell, assign or discount the promissory note to a third party.
Source: Item 10 — FINANCING (FDD pages 39–40)
What This Means (2025 FDD)
According to the 2025 Christian Brothers Automotive Franchise Disclosure Document, Christian Brothers Automotive may offer unsecured financing for remodels and renovations required by the Franchise Agreement. If Christian Brothers Automotive provides this financing, they will not require a security interest in any collateral.
This means that if a franchisee needs to remodel or renovate their Christian Brothers Automotive location and obtains financing directly from Christian Brothers Automotive, the franchisee will not have to pledge any assets as security for the loan. While the franchisee will be required to sign a promissory note, Christian Brothers Automotive will not take a security interest in any collateral, nor will they require a personal or third-party guaranty.
The repayment period for the loan will vary depending on the loan amount and the franchisee's circumstances. The interest rate is the secured overnight financing rate as of two business days prior to the loan date, published by the Federal Reserve Bank of New York, and is subject to change. Christian Brothers Automotive retains the discretion to approve or disapprove loan requests, and additional terms and conditions will be established and agreed upon with each borrower.
It's important to note that failure to make timely installment payments will result in the entire unpaid principal becoming immediately due and payable, and a default under the promissory note will also be considered a default under the Franchise Agreement. However, it is not Christian Brothers Automotive's current practice or intent to sell, assign, or discount the promissory note to a third party.