Is a pledge of the Byrider Franchise Agreement to someone other than the Company considered a 'Transfer'?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
An assignment, sale, gift, or other disposition includes the following events:
- (5) pledge of this Agreement (to someone other than the Company) or an ownership interest in the Company or its owners as security, foreclosure upon the Franchisee's Business, or the Franchisee's transfer, surrender, or loss of the possession, control, or management of the Franchisee's Business; provided that Franchisee may pledge the assets of the Franchisee's Business to a lender in connection with obtaining financing for the Franchisee's Business.
Source: Item 23 — Receipts (FDD pages 88–335)
What This Means (2025 FDD)
According to Byrider's 2025 Franchise Disclosure Document, a pledge of the Franchise Agreement to someone other than Byrider is considered a 'Transfer'. Specifically, the FDD states that an assignment, sale, gift, or other disposition includes the pledge of the Franchise Agreement to someone other than the Company. This falls under the broader definition of 'Transfer,' which requires Byrider's prior written approval.
This means that if a franchisee wants to use the Franchise Agreement as collateral for financing from a third party, it is considered a transfer that requires approval from Byrider. However, the franchisee may pledge the assets of the Byrider Business to a lender in connection with obtaining financing for the Franchisee's Business.
This requirement allows Byrider to maintain control over who is associated with the franchise and ensures that any third party involved meets their standards. It is important to note that any transfer without Byrider's approval is considered a breach of the Franchise Agreement and has no effect. A prospective franchisee should carefully consider these restrictions and approval processes before entering into a franchise agreement with Byrider.