Is pledging the Byrider franchise agreement as security 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 the 2025 Byrider Franchise Disclosure Document, pledging the franchise agreement to someone other than the company is considered a 'Transfer.' Specifically, the FDD states that a 'transfer' includes the pledge of the Franchise Agreement to someone other than Byrider as security.
This means that if a franchisee wants to use their Byrider franchise agreement as collateral for a loan or other financial obligation with a third party, it would be classified as a transfer under the agreement. As such, the franchisee would likely need to obtain Byrider's approval before doing so. Failing to get this approval could be considered a breach of the franchise agreement.
However, the FDD also states that a franchisee may pledge the assets of the Byrider Business to a lender in connection with obtaining financing for the Franchisee's Business. This indicates that while the Franchise Agreement itself cannot be pledged, the assets of the business can be pledged to a lender for financing.