Why is it important, according to Byrider, to pay CNAC?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
After the first year of operation of Franchisee's Business, 1.90% of Franchisee's Gross Receipts (CNAC Collections) throughout the remaining Term of this Agreement; provided, however, if this is Franchisee's third (or subsequent) Franchise Agreement that it has entered into with the Company, then Franchisee shall pay 1.65% of Franchisee's Gross Receipts (CNAC Collections) throughout the remaining Term of this Agreement, so long as (i) Franchisee is in compliance with all other Franchise Agreements with the Company; and (ii) Franchisee continues to operate at least two (2) additional Businesses under separate Franchise Agreements with the Company that are open to the public. In the event Franchisee fails to meet any of the foregoing conditions, Franchisee shall pay 1.90% of Franchisee's Gross Receipts (CNAC Collections) for the remaining Term of this Agreement.
Source: Item 23 — Receipts (FDD pages 88–335)
What This Means (2025 FDD)
According to Byrider's 2025 Franchise Disclosure Document, franchisees are required to remit a percentage of their Gross Receipts from CNAC Collections as part of their royalty fees. After the first year of operation, Byrider franchisees must pay 1.90% of their Gross Receipts from CNAC collections. However, if a franchisee operates at least two additional Byrider businesses under separate franchise agreements and remains compliant with all agreements, they may qualify for a reduced rate of 1.65% of Gross Receipts from CNAC collections. If they fail to meet these conditions, the 1.90% rate applies.
This payment structure highlights the integrated relationship between Byrider and CNAC (CarNow Acceptance Company). CNAC is Byrider's related finance company, and a portion of the franchisee's revenue is directly tied to the collections managed through CNAC. This revenue stream is a key component of Byrider's overall franchise system, as it allows Byrider to benefit from the financing aspect of the used car sales business.
For a prospective franchisee, this means that their financial obligations to Byrider extend beyond the initial franchise fee and ongoing royalties from vehicle sales. They must also factor in the percentage of CNAC collections they will be required to pay. This aspect of the royalty structure incentivizes franchisees to effectively manage and collect on the finance contracts, as their royalty obligations are directly linked to the performance of their CNAC collections. Understanding the dynamics between Byrider and CNAC, and the associated financial implications, is crucial for any potential franchisee.