Under what condition will the Christian Brothers Automotive agreement automatically terminate during its one-year term?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
- Term and Termination of Franchise Agreement. The term of this Agreement shall begin on the Effective Date and shall continue for a period of one (1) year, provided that this Agreement and the Franchise Agreement shall automatically terminate at the end of any threemonth period during which Franchisee fails to adequately reduce the Deficiency Gap, pursuant to Section 4(b) hereof. Franchisor may extend the term of this Agreement and the Franchise Agreement in its sole and absolute discretion.
Source: Item 23 — RECEIPTS (FDD pages 76–372)
What This Means (2025 FDD)
According to Christian Brothers Automotive's 2025 Franchise Disclosure Document, the franchise agreement has a one-year term but can automatically terminate under a specific condition. The agreement will automatically terminate if the franchisee fails to adequately reduce the Deficiency Gap during any three-month period. This termination occurs without any further notice from Christian Brothers Automotive.
This condition is tied to Section 4(b) of the agreement, which likely outlines the requirements for reducing the Deficiency Gap. The Deficiency Gap probably refers to a shortfall in performance or some other metric that the franchisee is expected to improve over time. The franchisor retains the discretion to extend the term of the agreement, even if the franchisee has not met the requirements for reducing the Deficiency Gap.
For a prospective Christian Brothers Automotive franchisee, this clause highlights the importance of understanding and meeting the performance expectations outlined in Section 4(b). Failure to do so could result in the termination of the franchise agreement within the first year. It would be prudent to seek clarification from Christian Brothers Automotive regarding the definition of "Deficiency Gap" and the specific steps required to adequately reduce it to avoid automatic termination.