If Byrider terminates the Franchise Agreement, what rights does Byrider have regarding the franchisee's lease or purchase agreements for the business location?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
the Business, its decision whether or not the Franchisee has satisfactorily completed such training may be made by the Company in the good faith exercise of its sole, subjective judgment;
- (2) The Franchisee's Business is not opened to the public for business within one (1) year of the execution of this Agreement;
- (3) Any financial, personal or other information provided by the Franchisee to the Company in connection with the Franchisee's application for the franchise is materially false, misleading, incomplete or inaccurate.
- 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, Byrider has specific rights regarding the franchisee's business location under certain termination scenarios. If Byrider terminates the Franchise Agreement before the business opens due to the franchisee's failure to complete the initial training, failure to open within one year, or submission of materially false information, Byrider has the option to require the franchisee to assign their rights under any existing lease or purchase agreements for the business location to Byrider or its designee. If this assignment occurs, Byrider or its designee will assume all of the franchisee's obligations under those agreements.
Furthermore, if the franchisee or an affiliate of the franchisee holds the title to the business location, and the termination is due to the franchisee's breach of the agreement prior to its scheduled expiration, Byrider has the right, but not the obligation, to enter into a lease for the business location. This lease would be at a fair market value rental rate for a term of two years. This provision ensures that Byrider has a mechanism to secure the location for continued operation of a Byrider business, especially if the franchisee's breach necessitates termination.
These stipulations are important for prospective franchisees to consider, as they outline the potential for Byrider to take over the business location under specific circumstances. Franchisees should carefully evaluate their ability to meet the initial training requirements, adhere to the opening timeline, and ensure the accuracy of all information provided to Byrider to avoid pre-opening termination. Additionally, understanding the conditions under which Byrider can lease the location after termination due to a breach is crucial for franchisees who own the business location, as it could impact their long-term property interests.