What is the Christian Brothers Automotive tenant's obligation regarding the application of payments?
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 Disclosure Document, 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 allocate any payment received from the franchisee towards any outstanding debt.
This includes applying the payment to the oldest debt, regardless of whether the franchisee intended the payment to cover a specific obligation. This right applies whether the debt arises under the Franchise Agreement or any other agreement.
This clause protects Christian Brothers Automotive by ensuring they can prioritize the collection of overdue amounts. For a prospective franchisee, this means that if you have multiple outstanding debts to Christian Brothers Automotive, you cannot control which debt a payment is applied to if you are delinquent. Christian Brothers Automotive has the discretion to apply it to the oldest outstanding obligation.