What are the conditions under which a Byrider franchisee can sell their business (as implied by obligations in Item 9) and how does this relate to the initial franchise fee (Item 5)?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
least two (2) additional Businesses under separate Franchise Agreements with the Company that are open to the public. In the event Franchisee fails to meet any of the foregoing conditions, Franchisee shall pay 1.90% of Franchisee's Gross Receipts (CNAC Collections) for the remaining Term of this Agreement.
plus,
Unaffiliated Assignment of Retail Installment Contracts. Franchisee may sell and assign retail installment contracts to unaffiliated third parties (each or collectively "Third Party"); provided, however: (i) Franchisee must obtain Company's approval of the Third Party, which Company shall not unreasonably withhold; and (ii) Franchisee may not sell or assign retail installment contracts with contract values, in the aggregate, of more than 20% of Franchisee's Gross Sales 12-month rolling monthly average.
Third Party Financed Sales Fee. Franchisee shall pay to Company $250 per contract sold or assigned at time of vehicle sale from Franchisee's dealer entity to Third Party ("Third Party Financed Sales Fee").
Bulk Sale of Accounts Fee. Franchisee shall pay to Company a fee equal to 1.90% of gross amounts of Byrider-or
What This Means (2025 FDD)
According to the 2025 Byrider Franchise Disclosure Document, a franchisee may be able to sell and assign retail installment contracts to unaffiliated third parties, but this is subject to certain conditions. The franchisee must first obtain Byrider's approval of the third party, which Byrider will not unreasonably withhold. Additionally, the franchisee cannot sell or assign retail installment contracts with contract values exceeding 20% of the franchisee's Gross Sales, calculated as a 12-month rolling monthly average.
In the event of a transfer of the franchise, Byrider specifies a "Transfer Fee" of $5,000. This fee is associated with the assignment of the franchise agreement to a new franchisee. The initial franchise fee, which is a $60,000 lump sum paid when signing the Franchise Agreement, is separate from the transfer fee and is generally non-refundable, except if written notice is provided within 60 days of signing the agreement.
These conditions ensure that Byrider maintains control over who becomes a franchisee and that the financial health of the franchise remains stable during and after a transfer. The transfer fee compensates Byrider for the administrative costs associated with approving and processing the transfer. The initial franchise fee, on the other hand, covers Byrider's costs for site review, sales, legal compliance, salary, and general administrative expenses and profits.