Does Byrider Franchising Partners have to approve the unaffiliated third-party prior to each sale or assignment of retail installment contracts by the Byrider franchisee?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
to pay a Royalty Fee of $11,192.33 per month for the Franchisee's Business under the Franchise Agreement and (ii) Franchisee (or its affiliate(s)) to pay $11,192.33 for each of the other Byrider Businesses.
Unaffiliated Assignment of Retail Installment Contracts. Franchisee may sell and assign retail installment contracts to unaffiliated third parties (each or collectively "Third Party"); provided, however: (i) Franchisee must obtain Company's approval of the Third Party, which Company shall not unreasonably withhold; and (ii) Franchisee may not sell or assign retail installment contracts with contract values, in the aggregate, of more than 20% of Franchisee's Gross Sales 12-month rolling monthly average.
Third Party Financed Sales Fee. Franchisee shall pay to Company $250 per contract sold or assigned at time of vehicle sale from Franchisee's dealer entity to Third Party ("Third Party Financed Sales Fee").
Bulk Sale of Accounts Fee.
Source: Item 16 — (FDD page 56)
What This Means (2025 FDD)
According to Byrider's 2025 Franchise Disclosure Document, a franchisee must obtain approval from Byrider Franchising Partners before selling or assigning retail installment contracts to unaffiliated third parties. This approval is required for each sale or assignment. However, Byrider Franchising Partners will not unreasonably withhold this approval. This requirement ensures that Byrider maintains some control over the financial transactions and risk management practices of its franchisees.
In addition to obtaining approval for the third party, the franchisee is limited in the amount of retail installment contracts they can sell or assign. The contract values, in the aggregate, cannot exceed 20% of the franchisee's Gross Sales (Byrider Vehicle Sales) over a 12-month rolling monthly average. This limitation is likely in place to prevent franchisees from excessively relying on third-party financing, which could potentially destabilize their business operations or negatively impact the Byrider brand.
Furthermore, if a Byrider franchisee sells or assigns a contract to a third party, they must pay Byrider a Third Party Financed Sales Fee of $250 per contract. They must also pay a Bulk Sale of Accounts Fee, which is equal to 1.90% of the gross amounts of Byrider-originated consumer retail installment contracts sold to the third party. These fees add to the cost of using third-party financing and may incentivize franchisees to utilize Byrider's internal financing options where possible.
These stipulations regarding the sale and assignment of retail installment contracts are important for prospective franchisees to consider. They highlight the restrictions and costs associated with using third-party financing, and emphasize the importance of understanding Byrider's preferred financial arrangements.