What is the definition of 'Royalty Fee' for Byrider franchisees?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
eleted in its entirety and replaced with the following:
For "Founder" "Legacy Founder Franchisees," "Interim Founder Franchisees," "Legacy Interim Founder Franchisees," and "Standard Franchisees":
3.10 Royalty Fee. The Royalty Fee commencement date is the earlier of the date the Franchisee's Business is open to the public or the one-year anniversary of the date of this Agreement. The term "Royalty Fee" shall mean that amount calculated monthly as follows:
Gross Sales (Byrider Vehicle Sales):
- A. For Franchisee's Byrider retail installment contracts assigned to Franchisee's affiliated CNAC entity: the greater of $6,000 or 2.5% of the Franchisee's Gross Sales (Byrider Vehicle Sales) (as defined above in Section 3.7) with a maximum monthly payment of: $7,000 for "Founder Franchisees"; $8,500 for "Legacy Founder Franchisees" and "Interim Founder Franchisees;" or $10,000 for "Legacy Interim Founder Franchisees" and "Standard Franchisees".
- B. 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-originated consumer retail installment contracts sold to a third party ("Bulk Sale of Accounts Fee").
Source: Item 22 — Contracts (FDD pages 87–88)
What This Means (2025 FDD)
According to Byrider's 2025 Franchise Disclosure Document, the Royalty Fee is defined as an amount calculated monthly, with the commencement date being the earlier of when the Franchisee's Business opens to the public or the one-year anniversary of the Franchise Agreement. The method of calculation depends on whether the franchisee qualifies for and elects to pay the Multi-Location Flat Rate (MLFR). If a franchisee qualifies for the MLFR, Section 3.10 of the Franchise Agreement is replaced.
For franchisees who do not qualify for the MLFR, the Royalty Fee is determined based on several factors: Gross Sales from Byrider vehicle sales, Gross Receipts from CNAC collections, and a Volume Surcharge. For Byrider retail installment contracts assigned to the franchisee's affiliated CNAC entity, the fee is the greater of $6,000 or 2.5% of the Franchisee's Gross Sales (Byrider Vehicle Sales), with a maximum monthly payment that varies based on the franchisee's designation. The maximum monthly payment can be $7,000 for "Founder Franchisees", $8,500 for "Legacy Founder Franchisees" and "Interim Founder Franchisees", or $10,000 for "Legacy Interim Founder Franchisees" and "Standard Franchisees". In addition to this, there is a charge of 1% of Franchisee's Gross Receipts (CNAC Collections), plus a volume surcharge of $112.00 for every vehicle sold at retail (whether financed or sold for cash) in excess of 75 vehicles per Business Location per calendar month.
Byrider also reserves the right to increase the Royalty Fee and Volume Surcharge based on the National Consumer Price Index for All Urban Consumers (CPI-U). Any such increase will be applied uniformly to all franchisees under the same form of franchise agreement, with written notification provided to franchisees on or before December 1st of each calendar year regarding changes for the following year. Franchisees should carefully review their Category Designation, as it impacts the Royalty Fee calculation, and understand the conditions under which they qualify for the MLFR, as failure to meet these conditions will result in the application of the standard Royalty Fee calculation.