What are the ongoing fees a Byrider franchisee must pay (Item 6) and how do these fees relate to the franchisee's compliance with the restrictions on sources of products and services (Item 8)?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
, and is nonrefundable. |
All fees are payable to Byrider Franchising Partners and are uniform to all franchisees receiving this Disclosure Document. The fees are non-refundable unless otherwise stated. During the term of the Franchise Agreement, Byrider Franchising Partners may offer optional services not currently contemplated for
which Byrider Franchising Partners may charge a fee. Byrider Franchising Partners reserves the right to charge you a technology fee or an accounting fee for analyzing and summarizing your accounting information and/or for providing financial reports and related reports or services. In addition, if Byrider Franchising Partners modifies the System, you pay for those required modifications.
- 2/ You may only sell and assign retail installment contracts to unaffiliated third-parties if (a) you obtain Byrider Franchising Partners' approval of the unaffiliated third-party prior to each sale or assignment, and (b) you may not sell or assign retail installment contracts with contract values, in the aggregate, of more than 20% of the Gross Sales (Byrider Vehicle Sales) during any particular calendar month.
- Ultra Franchisee (this applies if you joined the System after January 1, 2021). If you are an Ultra Franchisee, you will pay the Ultra2 Royalty Fee provided above. Note, the $7,800 minimum monthly payment provided above in connection with the Gross Sales (Byrider Vehicle Sales) component of the Ultra2 Royalty Fee will increase by 4.0% on January 1st of every other year (for example, it will increase by 4.0% on January 1, 2026 and increase by another 4.0% on January 1, 2028, etc.) throughout the term of the Franchise Agreement.
However, if you or your affiliate(s) have signed a Franchise Agreement prior to January 1, 2021:
Traditional Franchisee (this applies if you joined the System prior to January 1, 2021). If you are a Traditional Franchisee, you will pay the Tradition
What This Means (2025 FDD)
According to Byrider's 2025 Franchise Disclosure Document, franchisees must pay several ongoing fees. These fees include technology system fees, reputation management fees, and royalty fees, which can vary depending on when the franchisee joined the Byrider system (before or after January 1, 2021) and their franchisee category (Traditional or Ultra). Ultra Franchisees who joined after January 1, 2021, will see their minimum monthly royalty fee increase by 4.0% every other year, starting January 1, 2026. Additionally, franchisees may incur fees for selling retail installment contracts to unaffiliated third parties, including a $250 Third Party Financed Sales Fee per contract and a 1.9% Bulk Sale of Accounts Fee. There is also a volume surcharge of $112.00 for every vehicle sold at retail above 75 vehicles per month. These fees are payable to Byrider Franchising Partners.
Item 8 outlines restrictions on the sources from which franchisees can purchase goods and services. While franchisees are generally free to purchase most items from any source, Byrider may periodically require them to buy or lease specific services, equipment, products, materials, and supplies that meet certain specifications from approved or designated suppliers to maintain quality and brand reputation. An estimated 95% to 100% of ongoing purchases must be from designated or approved suppliers. Franchisees are required to license Byrider's Proprietary Computer Software and enter into a Software Services and User Agreement for ongoing service and support. They must also secure Google Workspace licenses and AnyConnect for VPN/NPA services to use the Proprietary Software.
The technology system fees mentioned in Item 6 are directly related to the restrictions described in Item 8, as franchisees are obligated to use Byrider's proprietary software and related technology. This ensures uniformity and integration within the Byrider system. The FDD also mentions that franchisees may purchase a starter kit from Byrider's approved suppliers for approximately $2,500, containing items like posters and menu boards. Franchisees must also maintain specific insurance coverage through companies acceptable to Byrider, including garage liability insurance ($1,000,000 limit), worker's compensation, unemployment insurance, Truth-in-Lending Act Insurance ($300,000), all risks coverage insurance, and cyber liability insurance ($1,000,000 per occurrence).
In summary, the ongoing fees and purchasing restrictions are designed to maintain brand standards, ensure compliance, and provide necessary technology and support for Byrider franchisees. Prospective franchisees should carefully consider these costs and restrictions as part of their investment decision.