If more than one person executes the Byrider Franchise Agreement, what is their liability?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
- 3.6 Franchisee. The term "Franchisee" used in this Agreement shall refer to each person executing this Agreement as the Franchisee and shall apply to each such person as if he/she were the only named Franchisee in this Agreement.
If the Franchisee is a corporation, limited liability company, or other entity, each of Franchisee's owners with 50% or more direct or indirect interest in Franchisee must execute a guaranty in the form the Company prescribes undertaking personally to be bound, jointly and severally, by all provisions of this Agreement and any ancillary agreements between Franchisee and the Company; provided that if no one individual owns 50% or more interest in Franchisee, individuals who together own at least 50% ownership interest in Franchisee must execute a guaranty.
Each person with ownership interest in Franchisee who does not execute a guaranty must execute a joinder in the form the Company prescribes undertaking personally to be bound by the covenants restricting transfers of interest in Franchisee and confidentiality and noncompetition covenants applicable to all owners of Franchisee under this Agreement.
If more than one person executes this Agreement as the Franchisee, each proprietor or person executing this Agreement shall be jointly and severally liable for all obligations and duties of the Franchisee hereunder.
Source: Item 23 — Receipts (FDD pages 88–335)
What This Means (2025 FDD)
According to the 2025 Byrider Franchise Disclosure Document, if more than one person signs the Franchise Agreement as the franchisee, each person is jointly and severally liable for all obligations and duties under the agreement. This means that Byrider can pursue any one of the franchisees for the full amount of any debt or obligation, regardless of their individual contribution or involvement.
This has significant implications for prospective Byrider franchisees. If entering into a franchise agreement with partners, each individual is taking on the risk of the entire business, not just a portion. A franchisee could be held responsible for the entire debt, even if the other franchisees are unable or unwilling to pay.
This clause is fairly standard in franchise agreements. It protects Byrider by ensuring that there are multiple parties responsible for fulfilling the obligations of the franchise. Prospective franchisees should carefully consider the financial stability and trustworthiness of their co-franchisees before entering into such an agreement, as their personal assets are at risk.
Furthermore, the FDD states that if the franchisee is a corporation, limited liability company, or other entity, each of the franchisee's owners with 50% or more direct or indirect interest in the franchisee must execute a guaranty. This guaranty ensures they are personally bound, jointly and severally, by all provisions of the agreement and any ancillary agreements between the franchisee and Byrider. If no one individual owns 50% or more interest, individuals who together own at least 50% ownership interest must execute a guaranty.