What happens if the Franchisee terminates the Franchise Agreement without cause regarding the lease for a Byrider franchise?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
provisions of this Rider and the provisions of the Lease, this Rider shall govern and control.
- Consent to Collateral Assignment to Franchisor; Disclaimer. Landlord acknowledges that Tenant intends to operate a Byrider business at the Premises, and that Tenant's rights to operate a Byrider business and to use the Byrider® name, trademarks and service marks are solely pursuant to a franchise agreement ("Franchise Agreement'') between Tenant and Byrider Franchising Partners, LLC ("Franchisor"). Tenant's operations at the Premises are independently owned and operated. Landlord acknowledges that Tenant alone is responsible for all obligations under the Lease unless and until Franchisor or another franchisee expressly, and in writing, assumes such obligations and takes actual possession of the Premises. Notwithstanding any provisions of this Lease to the contrary, Landlord hereby consents, without payment of a fee and without the need for further Landlord consent, to (i) the collateral assignment of Tenant's interest in this Lease to Franchisor to secure Tenant's obligations to Franchisor under the Franchise Agreement, and/or (ii) Franchisor's succeeding to Tenant's interest in the Lease as a result of Franchisor's exercise of rights remedies under such collateral assignment or as a result of Franchisor's termination of the Franchise Agreement due to Franchisee's breach or termination of the Franchise Agreement by Franchisee without cause, or Franchisor's exercise of rights or remedies granted in or under, any other agreement between Franchisor and Tenant, and/or (iii) Tenant's, Franchisor's and/or any other franchisee of Franchisor's assignment of the Lease to another franchisee of Franchisor with whom Franchisor has executed its then-standard franchise agreement. Landlord, Tenant and Franchisor agree and acknowledge that simultaneously with such assignment pursuant to the immediately preceding sentence, Franchisor shall be released from all liability under the Lease or otherwise accruing after the date of such assignment (in the event Franchisor is acting as the assignor under such assignment), but neither Tenant nor any other franchisee shall be afforded such release in the event Tenant/such franchisee is the assignor unless otherwise agreed by Landlord. Landlord further agrees that all unexercised renewal or extension rights shall not be terminated in the event of any assignment referenced herein, but shall inure to the benefit of the applicable assignee.
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- Use of Premises. Without limitation of uses permitted under the Lease, but in expansion thereof, Tenant shall have the right to use the Premises for purposes of operating a business offering used vehicles and, in connection therewith, financing services, under the Byrider name and marks.
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- Compliance of Premises With Applicable Law; Parking. Landlord represents and warrants that as of the date hereof the Premises are in compliance with all applicable law, including without limitation parking sufficient to comply with the use of the Premises as provided in paragraph 2 above. Tenant shall have the right to use parking spaces for its guests, invitees and employees in an amount at least sufficient to comply with applicable zoning and other laws. The use of the parking spaces is provided by Landlord to Tenant without additional charge.
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- Radius/Relocation. Any radius restrictions or relocation provisions found in the Lease are hereby deleted and of no further force or effect.
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- Tenant's Signage. Notwithstanding anything in the Lease contained to the contrary or in conflict, Landlord hereby grants and approves the following signage rights:
- 5.1. Landlord agrees to allow Tenant to use Franchisor's standard sign and awning package to the maximum extent permitted by local governmental authorities.
Source: Item 22 — Contracts (FDD pages 87–88)
What This Means (2025 FDD)
According to Byrider's 2025 Franchise Disclosure Document, the landlord consents to the franchisor succeeding to the tenant's (franchisee's) interest in the lease if the franchisee terminates the Franchise Agreement without cause. Additionally, if the franchisee or its affiliate owns the real estate and leases it to the franchisee for the Byrider business, the affiliate agrees to lease the location to Byrider or its designee at fair market rent for a term of two years upon the franchisee's termination without cause, if Byrider requests it in writing. However, Byrider is not obligated to lease the Business Location.
This means that if a Byrider franchisee decides to terminate the agreement without a valid reason, Byrider has the option to take over the lease of the business location. This provision ensures that Byrider can continue operating a franchise at that location, even if the original franchisee leaves. If the franchisee or an affiliated entity owns the property, Byrider has the right to lease the property for two years at fair market value.
This clause protects Byrider's interests by allowing it to maintain its presence in a specific market. For a prospective franchisee, this highlights the importance of carefully considering the decision to terminate the agreement, as it could result in Byrider taking over the lease or property. It is also important to note that the landlord must provide Byrider with a copy of the fully-executed lease within ten days of its full execution by Landlord and Tenant.