Are there any exceptions to the non-refundable fee policy for Christian Brothers Automotive?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 6: OTHER FEES]
Notes:
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- All fees are imposed by and payable to CBAC. Except as specifically described in this Item 6, all fees are non-refundable.
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- You will pay a "Royalty Fee" of 50% of monthly "Split Profits" (as defined below) to CBAC each month during the initial term of your Franchise Agreement and during the remainder of all terms of your Franchise Agreement, including all extension and renewal periods. This payment is due on the last day of each succeeding month, and is based on the "Split Profits" estimated for the preceding month. Estimated payments will be due monthly and a final reconciliation will be calculated at each year end for a "true up" on the annual "Split Profits". "Split Profits" shall mean all monies, revenues and items of value from all sources generated in connection with and/or in any way related to the Franchised Business minus the Approved Expense Items. "Approved Expense Items" shall mean (i) those expense items calculated under Generally
If we exercise our Step-In Rights, then: (a) we will keep in a separate account all monies generated by the operation of the Franchised Business, less the expenses of the Franchised Business, including reasonable compensation and expenses for our representatives (including an Interim Manager) as well as our other expenses; (b) you must agree to hold harmless us and our representatives for all actions occurring during the course of such temporary management of the Franchised Business and acknowledge that the Interim Manager and such representatives will have no liability to you except to the extent directly caused by the gross negligence or willful misconduct of us or the Interim Manager; (c) you agree to pay us a monthly management fee of $5,000.00 per month; (d) you agree to pay us (in addition to the management fee) all of our reasonable costs and expenses, including, but not limited to, attorneys' fees incurred as a consequence of exercising our Step-In Rights; and (e) you must acknowledge that we and our representatives (including an Interim Manager) will have a duty to utilize only commercially reasonable efforts in the operation of the Franchised Business and will not be liable for any debts, losses, damages, or obligations you or the Franchised Business incur, or to any of your or the Franchised Business's suppliers, vendors or creditors for any supplies, products, or other assets or services you or the Franchised Business purchases, while managed by us or an Interim Manager.
Source: Item 6 — OTHER FEES (FDD pages 17–25)
What This Means (2025 FDD)
According to Christian Brothers Automotive's 2025 Franchise Disclosure Document, most fees are non-refundable, but there is an exception. The FDD states, "Except as specifically described in this Item 6, all fees are non-refundable." This implies that there are specific instances where certain fees may be refundable, as detailed within Item 6 of the FDD.
Specifically, the document outlines the Royalty Fee, which is 50% of monthly Split Profits. This fee is subject to a "true up" at the end of each year, based on a final reconciliation of annual Split Profits. This reconciliation process suggests that adjustments and potential refunds related to the Royalty Fee are possible based on the final calculation of Split Profits. Additionally, if Christian Brothers Automotive exercises its Step-In Rights, they will keep monies generated by the operation of the Franchised Business, less the expenses of the Franchised Business.
Prospective franchisees should carefully review Item 6 of the 2025 FDD to identify the specific fees that may be refundable under certain conditions. Understanding the circumstances under which a refund may be possible is crucial for financial planning and risk assessment. It is also advisable to seek clarification from Christian Brothers Automotive regarding the specific conditions and procedures for obtaining refunds on any fees paid.