What is the monetary penalty for failing the third consecutive Byrider compliance audit?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
y deficiencies referred to herein for the first occurrence if said occurrence is cured within five (5) business days upon written notice by the Company to the Franchisee.
- 13.4 Compliance Audits. The Company may from time to time perform compliance audits reviewing operations of the Franchisee's Business, such as legal regulatory compliance issues, marketing, and adherence to Byrider, CNAC, and Service Center operational standards ("Compliance Audits" or in the singular "Compliance Audit"). If Franchisee fails a Compliance Audit, in the reasonable judgment of the Company, a failure currently meaning a score of less than 80%, Franchisee shall pay to Company a penalty in the amount of $500.00 plus reimbursement of
Source: Item 23 — Receipts (FDD pages 88–335)
What This Means (2025 FDD)
According to Byrider's 2025 Franchise Disclosure Document, failing to meet the minimum compliance standards in a Compliance Audit can result in monetary penalties. Specifically, if a Byrider franchisee fails a third consecutive Compliance Audit, the franchisee must pay Byrider a penalty of $10,000.00.
In addition to the monetary penalty for failing the third consecutive Compliance Audit, Byrider has the right to terminate the Franchise Agreement. This could result in significant financial and operational disruption for the franchisee.
It is important to note that the penalty structure escalates with each failed audit. The first failed audit results in a $500 penalty plus reimbursement of travel, food, and lodging expenses for a second audit. The second consecutive failed audit increases the penalty to $2,500 plus reimbursement of travel, food, and lodging for a third audit. Therefore, maintaining compliance is crucial to avoid these escalating penalties and potential termination of the franchise agreement.