What does Byrider mean by 'Discount Rate' in the context of customer accounts?

According to Byrider's 2025 Franchise Disclosure Document, the 'Discount Rate' refers to the rate at which customer accounts are discounted when sold from the Byrider division to the CNAC division. This definition is crucial for prospective franchisees to understand the financial relationship between Byrider and CNAC, particularly how the value of customer accounts is assessed during these transactions.

Understanding the discount rate is essential for franchisees as it directly impacts the revenue recognized from customer accounts that are sold to CNAC. The financial performance representations in Item 19 of the FDD provide data related to various financial metrics, including the discount rate, which can help franchisees project potential earnings. For instance, the FDD includes tables showing average discount rates for different quartiles of stores, offering insights into typical discounting practices.

Specifically, the FDD shows that for both the first and second quartiles of company-owned stores, the discount rate was 30.00% in 2022 and 2023. This means that when Byrider sells a customer account to CNAC, it does so at 30% less than the full value of the account. This practice is important for franchisees to consider when evaluating the overall profitability and cash flow of their Byrider business, as it affects the immediate return on the installment contracts they generate.

Prospective franchisees should carefully analyze the financial performance data provided in Item 19, paying close attention to how the discount rate influences the overall financial health of Byrider businesses. It is also advisable to discuss this rate with existing franchisees and the franchisor to fully understand its implications and how it may vary based on market conditions or other factors.