If Byrider terminates the franchise agreement and the franchisee has a lease or purchase agreement, does Byrider have an obligation to assume the franchisee's obligations?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
- B. If the Company elects to terminate this Agreement pursuant to this Section, the Company shall notify the Franchisee of its election. If, at the time of such termination, the Franchisee has entered into a binding lease or purchase agreement for the Business Location or has entered into binding purchase orders for the purchase of equipment or fixtures to be installed in the Business Location, the Company shall have the right but not the obligation to require the Franchisee to use its best efforts to assign its rights under the lease, purchase agreements and purchase orders to the Company or its designee. If the Company elects, and such assignments are made, the Company or its designee shall assume all of Franchisee's obligation under such lease, purchase agreements and purchase orders. If the Company exercises its right to terminate pursuant to this Article, this Agreement shall be null, void and of no effect, and neither party shall have any further right or obligation to the other except those obligations which, by their nature, survive such termination.
Source: Item 23 — Receipts (FDD pages 88–335)
What This Means (2025 FDD)
According to Byrider's 2025 Franchise Disclosure Document, if Byrider terminates the franchise agreement prior to the franchisee's business opening, Byrider has the right, but not the obligation, to require the franchisee to assign their rights under any existing lease, purchase agreements, and purchase orders to Byrider or its designee. If Byrider elects to have these assignments made, then Byrider or its designee will assume all of the franchisee's obligations under those leases, purchase agreements, and purchase orders. This is specifically in the context of termination before the business has opened.
This means that if a franchisee has entered into a lease or purchase agreements for their Byrider location and the franchise agreement is terminated by Byrider before the store opens, Byrider has the option to take over the franchisee's rights and responsibilities under those agreements. However, Byrider is not obligated to do so. This decision is at Byrider's discretion.
This clause protects Byrider by giving them the option to secure a location and equipment if the initial franchisee is terminated before opening. It also presents a potential risk for the franchisee, who could be left responsible for leases or purchase agreements if Byrider chooses not to assume them. A prospective franchisee should seek clarification from Byrider regarding the conditions under which Byrider would or would not assume these obligations, and attempt to negotiate terms that would protect them from financial liability in the event of pre-opening termination.