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  "documentTitle": "Canadian Tire Corporation (CTC.A)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Spruce Point Capital Management",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-12-05 00:00:00",
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  "pageNumber": 55,
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  "notes": "The slide uses a process flow diagram to explain the dealer model and potential financial risks.",
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      "text": "While Dealer loans are backed by CTC, each Dealers’ equity is pooled as collateral, which we believe could present challenges during an economic downturn.",
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      "text": "Canadian Tire Retail stores are operated by “Dealers” who own the operations of the individual locations. Dealers purchase inventory and rent the real estate from Canadian Tire. A dealer must invest a minimum of C$125k into the store, with the remainder financed and guaranteed by Canadian Tire. We estimate total start-up cost of $3 million. While Dealer loans are backed by CTC, each Dealers’ equity is pooled as collateral, which we believe could present challenges during an economic downturn.",
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      "text": "Canadian Tire’s dealer model leads to high turnover as individual dealers typically own only one property. When a dealer wants to sell his/her store, to move up the chain to a bigger store or retire, current dealers are able to bid on other stores based on the amount of sales at his/her current store. The purchase price is determined based on a formula set by CTC and allows for no build up of goodwill.",
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      "text": "Source: Spruce Point research",
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      "kind": "title",
      "text": "Relationship Between CTC And Dealers",
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