What responsibility does the Assignee assume regarding liabilities in the Christian Brothers Automotive agreement?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
ption. Assignor does hereby SELL, ASSIGN, TRANSFER and DELIVER to, and vest in, Assignee, to the extent permitted by law, all its right, title and interest in and to the Assigned Interest. Assignee hereby assumes complete and absolute responsibility and liability for all the Assumed Liabilities (as defined below). All Assignor's liabilities, duties and obligations arising directly or indirectly in connection with and/or related to the Assigned Interest will be collectively referred to from time to time as the "Assumed Liabilities." All Assignor's rights, titles and interests in and under the Franchise Agreement and/or the other documents and agreements entered into or to be entered into in connection with the Franchise Agreement will be collectively referred to from time to time as the "Assigned Interest." This assignment is made for good and valuable consideration, is coupled with an interest, and is therefore irrevocable.
Assignor and Assignee acknowledge and agree that CBAC would not consent to this assignment of the Assigned Interest unless and until the Assignee assumes all of the Assumed Liabilities without any reservation or limitation.
Source: Item 22 — CONTRACTS (FDD page 76)
What This Means (2025 FDD)
According to the 2025 Christian Brothers Automotive Franchise Disclosure Document, an assignee assumes complete responsibility and liability for all of the assignor's liabilities. Specifically, the assignee takes on all liabilities, duties, and obligations of the assignor that arise directly or indirectly in connection with, or are related to, the assigned interest. These assumed liabilities are referred to as the "Assumed Liabilities."
This means that if a franchisee sells their Christian Brothers Automotive franchise to a new owner (the assignee), the new owner is not only buying the rights to operate the franchise but is also taking on all of the previous owner's financial and legal responsibilities associated with the business. This includes any outstanding debts, contractual obligations, and potential lawsuits related to the franchise's operations.
Christian Brothers Automotive requires that the assignee assume all liabilities without any reservation or limitation as a condition of the assignment. The assignor also confirms that they own the assigned interests free and clear of all liens and encumbrances. The assignee's commitment to cover these assumed liabilities is a crucial part of the agreement, ensuring a smooth transition of ownership and protecting Christian Brothers Automotive from potential disruptions or legal issues.
This requirement protects Christian Brothers Automotive, as the franchisor, by ensuring that any existing liabilities associated with the franchise location are fully addressed by the new owner. For a prospective franchisee (the assignee), it is critical to conduct thorough due diligence to understand the full scope of potential liabilities before agreeing to the assignment. This may involve reviewing financial records, contracts, and legal documents to assess any risks associated with the franchise's past operations.