What is the Christian Brothers Automotive tenant's obligation regarding the prompt payment of rent?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
n. Tenant will take possession of the Premises within five days of receiving notice that the Premises are Substantially Completed (as such term is defined in the Master Lease).
5. Payment of Rent.
- a. Tenant will pay Lessor the following amounts during the following periods: (a) $22,000- $36,000 per month for the first one year period of this Lease (the exact amount will be as Lessor notifies Tenant in the Lease Term Letter) commencing on the Commencement Date (subject to the provisions of subsection (e), below) and on the first day of each calendar month thereafter; and (b) on each one year anniversary of this Lease, the rent for the next one year period of this Lease will be established by increasing the amount of the rent that was paid for the previous one year period by one and one-half percent. For example, at the end of the first year of the Lease, the rent paid for the initial one year period will be multiplied by one hundred and one and one-half percent and the product will become the rent for the next one year period (x multiplied by 101.5% = y; where x = rent for previous one year period and y = rent for subsequent one year period); at the end of the second one year period, the rent for that period will be multiplied by one hundred and one and one-half percent and the product will become the rent for the third one year period. This process will be continued at the end of each one year period of the Lease (including all renewals and extensions) to establish the rent for the next one year period.
- b.
Source: Item 23 — RECEIPTS (FDD pages 76–372)
What This Means (2025 FDD)
According to Christian Brothers Automotive's 2025 Franchise Disclosure Document, the tenant is obligated to pay rent on time, as their right of possession and the lessor's obligations are expressly conditioned upon it. Rent is due in advance, without demand, at the lessor's offices located at 17725 Katy Freeway, Houston, Texas 77094, on or before the 1st day of each month, commencing on the Commencement Date, without a grace period. The monthly rent for the first year will range from $22,000 to $36,000, as specified in the Lease Term Letter.
If the commencement date falls on a day other than the first of the month, the initial rent installment will be prorated for the remaining days of that month and is due on the commencement date. Annually, the rent will increase by one and one-half percent (1.5%) of the previous year's rent. If rent is not paid by the 10th day of the month, a late charge of $200.00 plus $10 per day will be assessed until the rent is paid. The tenant is also responsible for any late fees incurred by the lessor under the Master Lease due to the tenant's delinquency.
There is a $20.00 charge for each returned rent check, and late charges will accrue as if the check was never given until it is made good. Payments are applied first to non-rent items and then to rent, regardless of any notations on the check. The lessor may require rent to be paid via cash, money order, cashier's check, or automatic payment. If automatic payment is requested, the tenant must provide the necessary authorizations. The tenant is entitled to a rent abatement for six months following the commencement date, provided they are occupying the premises and not in default of any lease provisions.
This arrangement is fairly standard in commercial leases, where timely rent payment is critical for maintaining the lease agreement and avoiding penalties. Prospective Christian Brothers Automotive franchisees should ensure they have sufficient capital to cover the initial rent and any potential increases, as well as understand the implications of late payments. The rent abatement for the first six months is a significant benefit that can help with initial cash flow management.