What costs are included in 'Cost of Goods Sold' for a Byrider franchise, as defined in Item 19?

According to Byrider's 2025 Franchise Disclosure Document, Item 19 defines 'Cost of Goods Sold' as encompassing several specific expenses related to the operation of a Byrider franchise. These include the cost of the automobiles that are sold to customers. Additionally, the cost of goods sold includes expenses related to vehicle service contract claims, which would cover the costs Byrider incurs when customers utilize their service contracts for repairs or maintenance.

Another component of the 'Cost of Goods Sold' is the warranty reserve. This refers to the funds Byrider sets aside to cover potential future warranty claims on vehicles sold. Finally, the definition includes interest expense on debt associated with receivables financing. This refers to the interest Byrider pays on any loans or financing used to fund the retail installment contracts with customers.

For a prospective Byrider franchisee, understanding what is included in the 'Cost of Goods Sold' is crucial for accurately assessing the potential profitability of the franchise. By carefully tracking and managing these costs, franchisees can work to improve their gross profit margins and overall financial performance. The financial performance representations in Item 19 do not include revenue or expenses from related warranty reinsurance and real estate holding companies.