Does Byrider have discretion in applying payments made by the Franchisee to past due debts?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
- C. Notwithstanding any designation by the Franchisee, the Company shall have the sole discretion to apply any payments by the Franchisee to any past due indebtedness of the Franchisee for Royalty Fees, Advertising Fees, purchases from the Company, interest or any other indebtedness of the Franchisee. If the Company shall apply any payment by the Franchisee in a manner different from the application intended by the Franchisee, the Company shall give Franchisee written notice of how such payment was applied.
Source: Item 23 — Receipts (FDD pages 88–335)
What This Means (2025 FDD)
According to Byrider's 2025 Franchise Disclosure Document, Byrider has the authority to allocate a franchisee's payments towards any outstanding debts. This includes royalty fees, advertising fees, purchases from Byrider, interest, or any other form of franchisee debt. This means that even if a franchisee designates a payment for a specific purpose, Byrider can choose to apply it to a different outstanding balance at its discretion.
If Byrider applies a payment in a manner different from what the franchisee intended, Byrider is obligated to provide the franchisee with written notice explaining how the payment was applied. This ensures the franchisee is informed about the allocation of their funds and can reconcile their accounts accordingly.
This discretion benefits Byrider by allowing them to prioritize the collection of older debts or those deemed more critical. However, for the franchisee, this could mean that current invoices might not be covered if Byrider chooses to apply payments to past due amounts, potentially leading to further accumulation of interest or even triggering default clauses in the franchise agreement. Franchisees should maintain careful records and communication with Byrider to track payment allocations and manage their outstanding balances effectively.