Under what conditions is a Christian Brothers Automotive franchisee required to pay a transaction fee?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
If you authorize CBAC to find an outside buyer one who does not currently own and operate a Christian Brothers Automotive franchise, you will be responsible for paying CBAC a transaction fee, which is the greater of 7% of the gross value of the business transaction or $50,000. Upon authorizing CBAC to find an outside buyer for you, you must sign a Transaction Fee Agreement (Exhibit F to the Franchise Agreement) and pay CBAC a non-refundable deposit equal to the greater of $10,000.00 or 1% of the listed price of the Franchised Business. The remainder of the transaction fee is earned and payable upon the closing of the transaction between you and the buyer and is in addition to the transfer fee due and payable to CBAC, which is currently $30,000 per business. The transaction fee described in this note is an Unapproved Expense Item, meaning this fee does not fall into the category of an Approved Expense Item.
Source: Item 6 — OTHER FEES (FDD pages 17–25)
What This Means (2025 FDD)
According to Christian Brothers Automotive's 2025 Franchise Disclosure Document, a franchisee is required to pay a transaction fee if they authorize Christian Brothers Automotive to find an outside buyer for their franchise. This transaction fee is the greater of 7% of the gross value of the business transaction or $50,000. Upon authorizing Christian Brothers Automotive to find a buyer, the franchisee must sign a Transaction Fee Agreement and pay a non-refundable deposit equal to the greater of $10,000 or 1% of the listed price of the franchised business.
The remainder of the transaction fee is earned and payable upon the closing of the transaction between the franchisee and the buyer. This fee is in addition to the transfer fee due to Christian Brothers Automotive, which is currently $30,000 per business. It's important to note that this transaction fee is classified as an Unapproved Expense Item.
For a prospective franchisee, this means that if they decide to sell their Christian Brothers Automotive franchise and enlist the franchisor's help in finding a buyer, they will incur a significant transaction fee. This fee structure incentivizes franchisees to find their own buyers, as it avoids the additional cost of using Christian Brothers Automotive's services. Franchisees should carefully consider these costs when planning their exit strategy and factor them into their financial projections.