What is the 'Termination Event' that would cause Christian Brothers Automotive to deduct costs from the down payment?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
In the event a Termination Event (as defined below) occurs prior to CBAC executing a Contract (as defined below) for the acquisition of Land, then CBAC will deduct the $13,500 nonrefundable portion of the Down Payment and also deduct the reasonable costs that it incurs in selecting the site for Land and preparing to enter into the franchise relationship with you, and return any remainder of the Down Payment to you, provided that such deductions will not exceed $38,500. Any amount not refunded shall be deemed fully earned when paid and non-refundable
in consideration of administrative and other expenses CBAC incurs and for lost or deferred opportunities to enter into the Franchise Agreement with others. "Contract" means a contract for (a) the acquisition of land in the general area of the Location, (b) the lease of land in the general area of the location, or (c) a contract for the acquisition of an existing business.
In the event a Termination Event occurs after CBAC has executed a Contract, then CBAC will retain all of your $85,000 Down Payment, which amount shall be deemed non-refundable in consideration of administrative and other expenses CBAC has incurred.
"Termination Event" means any of the following (i) you do not qualify for the necessary financing to open and operate your CBA franchise, (ii) you choose not to proceed with the decision to open a CBA franchise on the Land, and/or (iii) you are unable to complete any of your other obligations that are conditions to your owning and operating a CBA franchise.
If no Termination Event occurs, you acknowledge that you (or an entity formed and owned by you for the sole purpose of owning and operating the Franchise) will execute the Franchise Agreement and pay the remaining amount of your Franchise Fee as provided in the Franchise Agreement no later than thirty (30) days prior to receiving the Certificate of Occupancy for the building where you will operate the Franchise. The Franchise Fee is non-refundable except as described above.
Source: Item 5 — INITIAL FEES (FDD pages 14–17)
What This Means (2025 FDD)
According to Christian Brothers Automotive's 2025 Franchise Disclosure Document, a 'Termination Event' that occurs before Christian Brothers Automotive executes a contract for land acquisition can result in deductions from the down payment. Specifically, Christian Brothers Automotive will deduct the $13,500 nonrefundable portion of the down payment, as well as reasonable costs incurred in site selection and preparation for the franchise relationship. However, these total deductions will not exceed $38,500. The remainder of the down payment, if any, will be returned to the franchisee. Any amount not refunded is considered fully earned by Christian Brothers Automotive to cover administrative and other expenses, as well as lost or deferred opportunities to enter into franchise agreements with others. A 'Contract' is defined as a contract for the acquisition or lease of land, or for the acquisition of an existing business in the general area of the location.
If a Termination Event occurs after Christian Brothers Automotive has executed a Contract, the franchisee will not receive any of the $85,000 Down Payment back.
The Termination Events are defined as (i) the franchisee does not qualify for the necessary financing to open and operate their Christian Brothers Automotive franchise, (ii) the franchisee chooses not to proceed with the decision to open a Christian Brothers Automotive franchise on the Land, and/or (iii) the franchisee is unable to complete any of their other obligations that are conditions to their owning and operating a Christian Brothers Automotive franchise.
It is important to note that certain other failures on the part of the franchisee, such as inaccurate representations, failure to complete training, or failure to pass background checks, do not constitute Termination Events. However, Christian Brothers Automotive still has the right to terminate the Letter Agreement, franchise relationship, and Franchise Agreement in such cases, but will refund the down payment less the $13,500 non-refundable portion.