Can a Byrider franchise be assigned to an entity that has an ownership interest in a Competitive Business?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
If the proposed transfer is of this Agreement, the Franchisee's Business or a controlling ownership interest in the Franchisee or one of its owners, or is one of a series of transfers (regardless of time period over which these transfers take place) which in the aggregate transfer this Agreement or a controlling ownership interest in the
Franchisee (or one of its owners) (each, a "Control Assignment"), then all of the following conditions must be met before or concurrently with the effective date of the transfer:
- (3) Neither the Assignee nor its owners (if the Assignee is a legal entity) or affiliates have an ownership interest (direct or indirect) in or perform services for a Competitive Business (defined in Section 18.1);
Source: Item 23 — Receipts (FDD pages 88–335)
What This Means (2025 FDD)
According to Byrider's 2025 Franchise Disclosure Document, a franchise cannot be transferred to an entity with an ownership interest in a competitive business. Specifically, if a franchisee seeks to transfer their agreement, business, or a controlling ownership interest, the assignee (or its owners/affiliates if the assignee is a legal entity) must not have any direct or indirect ownership interest in, or perform services for, a Competitive Business as defined in Section 18.1 of the franchise agreement.
This restriction is in place to protect Byrider's market position and prevent conflicts of interest. The term "Competitive Business" is defined as any business that offers leasing or sells used automobiles while retaining the retail installment contract or lease, operates as a buy here pay here or lease financing provider, provides vehicle repair services, or grants franchises or licenses for such businesses. This definition is quite broad, so prospective franchisees need to carefully evaluate any existing business affiliations to ensure compliance.
This condition is one of several that must be met before a transfer can be approved. Other conditions include the assignee demonstrating the necessary aptitude, skills, qualifications, credit, and financial resources to operate the Byrider business. Additionally, the franchisee must be in full compliance with all obligations to Byrider, including paying all monetary obligations, submitting required reports, and adhering to all agreement provisions. The landlord of the Business Location must also allow the lease to be transferred to the assignee, and the franchisee must not be in default under the lease.
In summary, Byrider maintains strict control over who can become a franchisee, even through a transfer. The prohibition against transferring to entities involved in competitive businesses is a key element of this control, aimed at preserving the integrity and competitiveness of the Byrider franchise system.