As a Byrider franchisee, am I allowed to hold any ownership interest in a Competitive Business, regardless of its location?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee and its owners agree that, during this Agreement's term, neither Franchisee, nor any owner, nor any member of Franchisee's or an owner's immediate family will:
- (a) have any direct or indirect, controlling or non-controlling interest as an owner (whether of record, beneficial or otherwise) in, or as a landlord of, a Competitive Business (defined below), wherever located or operating;
- (b) perform services as a director, officer, manager, employee, consultant, representative or agent, or in any other capacity, for a Competitive Business, wherever located or operating;
- (c) recruit or hire any employee of Company, Company's affiliates or Company's franchisees without obtaining prior written permission from such employer; or
- (d) divert or attempt to divert any actual or potential business or customer of the Franchisee's Business to a Competitive Business.
The term "Competitive Business" means any business (other than a Business being operated pursuant to a franchise agreement with the Company) which: (i) offers leasing or sells used automobiles, while retaining the retail installment contract or lease, (ii) operates itself as a provider of buy here pay here or lease financing whereby the selling dealer who originates retail installment contracts or leases and the assignee of the retail installment contracts or leases have some common equity ownership; (iii) provides vehicle repair services; or (iv) grants franchises or licenses to operate a business covered by the terms of (i), (ii) or (iii) of this subsection.
Source: Item 23 — Receipts (FDD pages 88–335)
What This Means (2025 FDD)
According to Byrider's 2025 Franchise Disclosure Document, during the term of the Franchise Agreement, Byrider franchisees, their owners, and their immediate family members are restricted from having any direct or indirect ownership interest in a Competitive Business, regardless of where that business is located or operating. This restriction applies whether the ownership interest is controlling or non-controlling.
A "Competitive Business" is defined as any business that (i) offers leasing or sells used automobiles, while retaining the retail installment contract or lease, (ii) operates itself as a provider of buy here pay here or lease financing whereby the selling dealer who originates retail installment contracts or leases and the assignee of the retail installment contracts or leases have some common equity ownership; (iii) provides vehicle repair services; or (iv) grants franchises or licenses to operate a business covered by the terms of (i), (ii) or (iii) of this subsection.
This in-term covenant not to compete is a standard provision in franchise agreements to protect the franchisor's business model and market share. It prevents franchisees from using Byrider's confidential information and systems to benefit a competing business. Prospective franchisees should carefully consider this restriction and ensure they do not have any conflicting business interests before entering into a franchise agreement with Byrider.