What must a Byrider franchisee do to continue to qualify for the MLFR?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
ip Qualification, then Franchisee will no longer qualify for, and pay, the MLFR and will instead pay the Royalty Fee as originally provided under Sections 1-3 in this Addendum.
- D. Traditional Royalty Fee. The Company acknowledges and agrees that the MLFR shall supersede Sections 1-3 of this Addendum so long as Franchisee (and its affiliates, if applicable): (i) continue to qualify for, and elect to pay, the MLFR; (ii) continue to operate at least two Byrider Businesses; and (iii) remain in compliance with the Franchise Agreement and all other agreements with the Company and its affiliates. If Franchisee (or its affiliates, if applicable) fail to comply with the foregoing conditions for MLFR, Franchisee will immediately be required to comply with the obligations under Sections 1-3 of this Addendum (including the obligation to pay the Royalty Fee due thereunder).
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- Category Designation. For purposes of Section 3.10 of the Franchise Agreement, as revised by this Addendum, Franchisee will receive the Category Designation provided on Exhibit A to this Addendum.
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- Release.
Source: Item 22 — Contracts (FDD pages 87–88)
What This Means (2025 FDD)
According to Byrider's 2025 Franchise Disclosure Document, a franchisee must meet certain conditions to continue qualifying for and paying the Market Level Franchise Royalty (MLFR). Specifically, the franchisee (and its affiliates, if applicable) must continue to qualify for and elect to pay the MLFR. They must also continue to operate at least two Byrider businesses. Finally, they must remain in compliance with the Franchise Agreement and all other agreements with Byrider and its affiliates.
If a Byrider franchisee, or their affiliates, fails to comply with these conditions, they will immediately be required to comply with the obligations under Sections 1-3 of the Addendum, which includes the obligation to pay the Royalty Fee due under those sections. Additionally, the franchisee must maintain at least 51% common equity ownership and voting control among the Byrider businesses that they own. Failure to meet this ownership qualification will result in the franchisee no longer qualifying for the MLFR, and they will instead pay the Royalty Fee as originally provided under Sections 1-3 in the Addendum.
In practical terms, this means a Byrider franchisee needs to actively manage their ownership structure, operational footprint, and compliance with all agreements to maintain the MLFR. Failure to do so could result in a higher royalty fee, impacting their profitability. Prospective franchisees should carefully review the Franchise Agreement and related addenda to fully understand the requirements for maintaining the MLFR and the potential financial implications of non-compliance.