What is the purpose of the Addendum to Franchise Agreement for Traditional and Legacy Royalty Fee for Byrider?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
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EXHIBIT J
TO
FRANCHISE DISCLOSURE DOCUMENT
ADDENDUM TO FRANCHISE AGREEMENT #______ FOR TRADITIONAL AND LEGACY ROYALTY FEE
| | | | | | | | | This Addendum to Franchise Agreement for Traditional and Legacy Royalty Fee ("Addendum") | | |----------------|---------|------|---------|---------|-------------|-----------|-----|------------------------------------------------------------------------------------------|-----| | | | | | | | | | modifies the Franchise Agreement dated, identified as # ("Franchise | | | Agreement") | entered | into | between | Byrider and | Franchising | Partners, | LLC | ("Company") (collectively | and | | "Franchisee"). | | | | | | | | | | WHEREAS, in addition to the Franchise Agreement, Franchisee, or its affiliate, has signed a franchise agreement with Company prior to January 1, 2021 for the operation of at least one (1) business in the System and under the Marks in addition to the Franchisee's Business.
WHEREAS, the Company will allow Franchisee to pay a modified Royalty Fee instead of the Royalty Fee provided in Section 3.10 of the Franchise Agreement in accordance with the terms and conditions set forth in this Addendum.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Company and Franchisee hereby agree as follows:
- Royalty Fee. Section 3.10 of the Franchise Agreement is hereby deleted in its entirety and replaced with the following:
For "Founder" "Legacy Founder Franchisees," "Interim Founder Franchisees," "Legacy Interim Founder Franchisees," and "Standard Franchisees":
3.10 Royalty Fee. The Royalty Fee commencement date is the earlier of the date the Franchisee's Business is open to the public or the one-year anniversary of the date of this Agreement. The term "Royalty Fee" shall mean that amount calculated monthly as follows:
Gross Sales (Byrider Vehicle Sales):
- A. For Franchisee's Byrider retail installment contracts assigned to Franchisee's affiliated CNAC entity: the greater of $6,000 or 2.5% of the Franchisee's Gross Sales (Byrider Vehicle Sales) (as defined above in Section 3.7) with a maximum monthly payment of: $7,000 for "Founder Franchisees"; $8,500 for "Legacy Founder Franchisees" and "Interim Founder Franchisees;" or $10,000 for "Legacy Interim Founder Franchisees" and "Standard Franchisees".
- B. Unaffiliated Assignment of Retail Installment Contracts. Franchisee may sell and assign retail installment contracts to unaffiliated third parties (each or collectively "Third Party"); provided, however: (i) Franchisee must obtain Company's approval of the Third Party, which Company shall not unreasonably withhold; and (ii) Franchisee may not sell or assign retail installment contracts with contract values, in the aggregate, of more than 20% of Franchisee's Gross Sales 12-month rolling monthly average.
Third Party Financed Sales Fee. Franchisee shall pay to Company \$250 per contract sold or assigned at time of vehicle sale from Franchisee's dealer entity to Third Party ("Third Party Financed Sales Fee").
Bulk Sale of Accounts Fee. Franchisee shall pay to Company a fee equal to 1.90% of gross amounts of Byrider-originated consumer retail installment contracts sold to a third party ("Bulk Sale of Accounts Fee").
plus,
Gross Receipts (CNAC Collections):
1% of Franchisee's Gross Receipts (CNAC Collections) (as defined above in Section 3.7).
plus,
Volume Surcharge:
$112.00 for every vehicle sold at retail (whether financed or sold for cash) in excess of 75 vehicles per Business Location per calendar month.
- Monthly Combined Royalty Cap.
Source: Item 22 — Contracts (FDD pages 87–88)
What This Means (2025 FDD)
According to the 2025 Byrider Franchise Disclosure Document, the Addendum to Franchise Agreement for Traditional and Legacy Royalty Fee modifies the original Franchise Agreement, specifically concerning royalty fees. This addendum allows franchisees who signed a franchise agreement with Byrider or its affiliate before January 1, 2021, and operate at least one additional business within the Byrider system, to pay a modified royalty fee as opposed to the standard royalty fee outlined in Section 3.10 of the Franchise Agreement.
Specifically, the addendum replaces Section 3.10 of the original agreement, detailing how the royalty fee is calculated for "Founder," "Legacy Founder Franchisees," "Interim Founder Franchisees," "Legacy Interim Founder Franchisees," and "Standard Franchisees." The royalty fee commencement date is set as the earlier of the business opening to the public or the one-year anniversary of the agreement date.
The addendum also addresses potential increases to the royalty fee. Byrider retains the right to increase the royalty fee based on the National Consumer Price Index for All Urban Consumers (CPI-U), with any such increase applied uniformly to all franchisees under the same agreement. Franchisees will be notified in writing by December 1st of each year regarding any changes to the royalty fee for the following calendar year.
Furthermore, the addendum includes provisions for franchisees who qualify for and elect to pay a Multi-Location Flat Rate (MLFR). If a franchisee meets certain conditions, such as maintaining at least 51% common equity ownership and voting control among their Byrider businesses, operating at least two Byrider businesses, and remaining compliant with all agreements, they may pay the MLFR instead of the standard royalty fee. Failure to meet these conditions would require the franchisee to revert to the royalty fee obligations outlined in Sections 1-3 of the addendum.