What is the 'Startup Period' for a Christian Brothers Automotive franchise?

Following the first year of operation of your CBA franchise, or in the case of a transfer of the franchise, following the first year of operation by the transferee (the "Startup Period"), the following "Minimum Performance Requirement" must be maintained: you must at all times maintain a rolling six (6) months of positive Net Ordinary Income, meaning the Net Ordinary Income must be equal to or exceed $1 for each rolling six (6) month period. If this Minimum Performance Requirement is not maintained at any time during the term of the Franchise Agreement following the Startup Periods, we may, in our sole discretion, terminate the Franchise Agreement or we may elect, in lieu of terminating the Franchise Agreement, to allow you to enter into our Store In Distress Support Program ("Store In Distress Support Program") by executing the Store In Distress Support Program Agreement attached to the Franchise Agreement as Exhibit D. "Net Ordinary Income" means Total Income minus Cost of Goods Sold minus Total Expenses. "Total Income" shall mean ordinary income from all sources. "Cost of Goods Sold" shall mean all costs including all transportation, labor, parts, discounts and fees. "Total Expenses" shall mean administrative and overhead expenses before amortization, depreciation and royalty expenses. These definitions are subject to change in our discretion, as set forth in the Confidential Operations Manual from time to time, provided that such definitions are in accordance with prevailing accounting practices in the automotive service and repair industry.

Following the Startup Period, and in addition to the Minimum Performance Requirement described above, the following additional Minimum Performance Requirement must also be maintained: you must not allow your Net Ordinary Income (as defined above) to fall 30% or more below the mean Net Ordinary Income of all mature CBA franchises for three (3) consecutive years (the "Minimum Threshold"). The mean franchise-wide Net Ordinary Income will be determined by the closed financial statements of all "Mature Franchisees" as of December 31 of each year. For purposes of this calculation, a "Mature Franchisee" is a franchisee whose Christian Brothers Automotive franchise location has been open to the public for a minimum of twelve (12) months as of December 31 of the year for which the mean Net Ordinary Income is being calculated. If this Minimum Performance Requirement is not maintained at any time during the term of the Franchise Agreement following the Startup Period, we may, in our sole discretion, terminate the Franchise Agreement. We may modify the Minimum Threshold from time to time in our sole and absolute discretion. Any modification of the Minimum Threshold will be set forth in the Confidential Operations Manual. For purposes of determining three (3) consecutive years, in the event of a renewal, the years preceding the applicable Renewal Term will count toward the three (3) consecutive years for the Minimum Threshold determination.

Source: Item 12 — TERRITORY (FDD pages 52–54)