Does Byrider have an obligation to proceed against both the Finance Entity and the franchisee jointly in case of a breach of the Franchise Agreement?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Responsibility for the Acts of the Finance Entity. The grant of our consent under this Agreement is an accommodation to you and is not intended to bifurcate accountability for the "Franchisee's" obligations described in the Franchise Agreement. The Finance Entity and you each acknowledge and agree that an act or omission of one will be deemed to be the act or omission of the other, and each will be responsible for the consequences of that act or omission irrespective of who committed it. Further, a breach by either the Finance Entity or you of the Franchise Agreement will constitute a breach of the entire Franchise Agreement, and both the Finance Entity and you will bear liability for such breach, jointly and severally. While we may elect to do so, we are not required to proceed against the Finance Entity and you jointly or to proceed against one before proceeding against the other.
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- Personal Guarantees. Each of the undersigned Guarantors agrees that its guarantee under the Guarantee Agreement of the performance of the "franchisee" shall be deemed to be a guarantee of the performance of both the Finance Entity and you and that all references in the Guarantee Agreement to "franchisee" are deemed to be references to both.
Source: Item 23 — Receipts (FDD pages 88–335)
What This Means (2025 FDD)
According to the 2025 Byrider Franchise Disclosure Document, Byrider is not obligated to proceed against both the Finance Entity and the franchisee jointly in the event of a breach of the Franchise Agreement. The agreement states that an act or omission by either the Finance Entity or the franchisee will be considered the act or omission of both, leading to joint and several liability for any breach. However, Byrider retains the discretion to choose whether to pursue action against both parties together, or against either party individually.
This means that as a prospective Byrider franchisee, you and your Finance Entity will be held jointly and severally liable for any breaches of the Franchise Agreement. Byrider can pursue legal action against either party, or both, depending on their strategic decision. This clause is designed to protect Byrider's interests by ensuring that all parties involved in the franchise operation are accountable for compliance with the Franchise Agreement.
The agreement emphasizes that Byrider's consent to the operation of a Finance Entity is an accommodation to the franchisee and does not reduce the franchisee's obligations under the Franchise Agreement. The personal guarantees provided by the guarantors extend to the performance of both the Finance Entity and the franchisee, reinforcing the comprehensive accountability structure.
Franchisees should be aware that this arrangement could lead to complex legal situations if a breach occurs. It is important to fully understand the obligations outlined in the Franchise Agreement and the potential liabilities of both the franchisee and the Finance Entity. Prospective franchisees should seek legal counsel to fully understand the implications of this clause.