Is a Byrider franchisee bound by a non-compete provision?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
ARTICLE XVIII
COVENANTS NOT TO COMPETE
18.1 In-Term Covenant Not To Compete.
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:
functions and all personnel receiving special training from the Company to execute confidentiality covenants in a form satisfactory to the Company.
- 18.4 Enforcement of Covenants Not To Compete. The Franchisee acknowledges that violation of the covenants not to compete contained in this Agreement would result in immediate and irreparable injury to the Company for which no adequate remedy at law will be available. Accordingly, the Franchisee hereby acknowledges the Company's right to seek an injunction and agrees not to contest any application by the Company for such injunction to prohibit any conduct by the Franchisee in violation of the terms of those covenants not to compete set forth in this Agreement. The Franchisee expressly agrees that it may be conclusively presumed that a violation of the terms of said covenants not to compete was accomplished by and through the Franchisee's unlawful utilization of the Company's Confidential Information, know-how, methods and procedures. Further, the Franchisee expressly agrees that the existence of any claims it may have against the Company, whether or not arising from this Agreement, shall not constitute a defense to the enforcement by the Company for the covenants not to compete set forth in this Agreement.
- 18.5 Fee for Employment Practices. Franchisee acknowledges that the Company and Byrider Businesses make substantial investment in the hiring, training, and developing of its and their employees. Although Franchisee is not restricted from soliciting and/or hiring such employees, Franchisee agrees that if, during the Term and for a one (1)-year period after the termination or expiration of this Agreement, Franchisee or any of its owners, directly or indirectly, on behalf of itself or any other person (whether as an owner, employee, agent, consultant or in any other capacity), employs any person who is an employee of, or who, within one year of being hired by Franchisee, was previously employed by, the Company (or any of its affiliates) or any Byrider Business, without the written consent of the Company (or such affiliate) or such Byrider Business, then Franchisee must immediately pay an amount of damages equal to three (3) times the annual compensation of such individual to the Company (or its affiliate) or Byrider Business, as applicable.
ARTICLE XIX
ARBITRATION
However, to the extent required by applicable law, no assignment will be made except to an assignee who, in Byrider Franchising Partners' good faith judgment, is willing and able to assume Byrider Franchising Partners' obligations under the Franchise Agreement.
- The following is added to the end of the "Summary" sections of Item 17(v), titled "Choice of forum" and Item 17(w), titled "Choice of law:"
The foregoing choice of law should not be considered a waiver of any right conferred upon Byrider Franchising Partners or upon you by Article 33 of the General Business Law of the State of New York.
NORTH DAKOTA
- The following is added to the end of the "Summary" sections of Item 17€, entitled "Requirements for you to renew or extend" and Item 17(n), entitled "Conditions for Byrider Franchising Partners' approval of transfer:"
However, any release required as a condition of renewal and/or assignment/transfer will not apply to the extent prohibited by the North Dakota Franchise Investment Law.
- The following is added to the end of the "Summary" section of Item 17(s), entitled "Non-competition covenants after the franchise is terminated or expires:"
Covenants not to compete such as those mentioned above are generally considered unenforceable in the State of North Dakota; however, Byrider Franchising Partners and you will enforce the covenants to the maximum extent the law allows.
Source: Item 15 — Obligation to Participate in the Actual Operation of the Franchise Business (FDD pages 55–56)
What This Means (2025 FDD)
According to the 2025 Byrider Franchise Disclosure Document, Byrider franchisees are subject to both in-term and post-term non-compete covenants. During the term of the Franchise Agreement, the franchisee, its owners, and their immediate family members are prohibited from engaging in competitive activities. After the agreement terminates or expires, these restrictions continue, preventing involvement in similar businesses. Specifically, Article XVIII details these covenants not to compete.
Byrider emphasizes the importance of these covenants, stating that violations would cause immediate and irreparable harm for which monetary compensation would be inadequate. Consequently, Byrider reserves the right to seek injunctive relief to prevent franchisees from breaching these covenants, and franchisees agree not to contest such actions. The agreement presumes that any violation involves the unlawful use of Byrider's confidential information, know-how, methods, and procedures. Franchisees acknowledge that any claims they may have against Byrider do not constitute a defense against the enforcement of these non-compete agreements.
Furthermore, Byrider includes a clause addressing the hiring of employees. Even though franchisees are not restricted from soliciting or hiring Byrider employees, if a franchisee hires a current or former Byrider employee (within one year of their previous employment) without Byrider's written consent, the franchisee must pay damages equal to three times the annual compensation of the hired employee. This provision underscores Byrider's investment in its employees and aims to protect its business interests by discouraging franchisees from poaching talent. However, in North Dakota, covenants not to compete are generally considered unenforceable, but Byrider states that they will enforce the covenants to the maximum extent the law allows.