How is the 'Discount Rate' defined in the context of a Byrider franchise's sale of customer accounts?

According to Byrider's 2025 Franchise Disclosure Document, the 'Discount Rate' is defined as the rate at which customer accounts are discounted when sold from the Byrider division to the CNAC division. This definition is crucial for prospective franchisees to understand the financial dynamics between Byrider and CNAC, particularly concerning the sale of customer accounts and the associated revenue implications.

Understanding the discount rate is essential for franchisees as it directly impacts the revenue realized from customer accounts. A higher discount rate means that the accounts are sold at a greater reduction from their original value, which could affect the franchisee's overall profitability. Conversely, a lower discount rate would result in a smaller reduction, potentially increasing the revenue generated from these sales. Franchisees should carefully consider this rate when evaluating the financial performance representations provided in Item 19 of the FDD.

Item 19 includes financial performance data, such as average discount rates for franchisee-owned locations. For instance, the average discount rate for 92 franchisee locations was 28.84%, with a median of 30.00%. For 8 company-owned locations, the average discount rate was 30.00%. These figures provide a benchmark for prospective franchisees to compare against and assess the potential financial outcomes of their own operations. It's important to note that individual results may vary, and there is no guarantee that a franchisee will achieve the same performance.

Prospective franchisees should also consider how the discount rate interacts with other financial metrics, such as the interest rate charged on retail installment contracts (21.15% average for franchisee locations) and the amount financed ($14,846 average for franchisee locations). A comprehensive understanding of these interconnected factors is vital for making informed decisions and accurately projecting potential earnings. Byrider Franchising Partners will provide written substantiation for this financial information to prospective franchisees upon reasonable request.