How does the required software licensing from Byrider Franchising Partners (Item 8) affect the franchisee's ability to operate their business in a specific territory (Item 12)?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
A. Proprietary Computer Software and Starter Kit. You must license Byrider Franchising Partners' Proprietary Computer Software from Byrider Franchising Partners and enter into a Software Services and User Agreement (see Exhibit E attached to the Franchise Agreement) with Byrider Franchising Partners for ongoing service and support to the Proprietary Software and all other components of the technology system. Byrider Franchising Partners does not provide lease packages for its Proprietary Software but may provide you with a list of third parties that offer lease packages for the entire technology system as described in Item 11. Any financing you arrange for the purchase or lease of the technology system may not contain terms that encumber the Proprietary Software in any way. Under no circumstances will the ownership rights to the Proprietary Software change from Byrider Franchising Partners to you or to a third party.
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You are not required to purchase or lease any other computer equipment or software from Byrider Franchising Partners or Byrider Franchising Partners' designated sources other than Google Workspace licenses and AnyConnect for VPN/NPA services to use the Proprietary Software.
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Byrider Franchising Partners owns the Proprietary Software. Byrider Franchising Partners has the sole right to service, update and maintain the Proprietary Software. Byrider Franchising Partners has the right to immediately deny access for specific causes, such as viruses, hackers, or performance degradation. Byrider Franchising Partners maintains a specific level of standards for networks, security, software, hardware, and other features that all franchisees must be in compliance with. These standards are required to facilitate the common services provided by Byrider Franchising Partners, and to minimize disruptions or security concerns throughout the franchise community. Other than the Proprietary Software, Byrider Franchising Partners has no contractual obligation for maintenance, repairs, updates or upgrades to the remaining components to your technology system. We currently estimate that it will cost $5,000 to $40,000 to purchase or lease hardware, software and other components of the technology system and the annual cost of maintenance, repairing, updating and upgrading the technology system will likely range from $0 to $75,000.
The Byrider Franchising Partners Software consists of programs specially designed to the needs of your Business, and it includes programs that keep track of inventory and vehicle repairs, store customer information, assist in processing financing to customers, perform credit checks and record accounting transactions. Byrider Franchising Partners will have unlimited independent access to the sales and vehicle repair information stored in your files. (Franchise Agreement - Article 13.2).
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You must license and use the Byrider Franchising Partners technology system necessary to operate your day-to-day business (Franchise Agreement - Article 9.4) and maintain required records (Franchise Agreement - Articles 13.1 - 13.2). Byrider Franchising Partners will have independent access to the data collected in your files.
The cost of technology implemented at the franchise location is the sole responsibility of the franchisee to install, maintain and upgrade. There is a per-site fee to cover VPN clients for accessing Byrider Franchising Partners proprietary systems as well as a per-user fee to license hosted services such as email.
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If you sign an Area Development Agreement and comply with its terms and conditions, you will be granted a protected territory and Byrider Franchising Partners cannot license other Byrider franchises or open company-owned Byrider Businesses within your protected territory. If you enter into an Area Development Agreement, your protected territory will be comprised of the counties or cities that you have agreed to develop (see Exhibit C). Continuation of your territorial rights under the Area Development Agreement does not depend upon achievement of a certain sales quota, market penetration level, or other contingency. However, we may modify or terminate your rights only if you fail to meet your development schedule or otherwise default under the Area Development Agreement. Byrider Franchising Partners will retain all rights similar to those provided in the previous paragraph with respect to the protected territory granted under the Area Development Agreement. Byrider Franchising Partners must approve the location of any future/additional Byrider Business that you intend to develop pursuant to the Area Development Agreement. Byrider Franchising Partners' thencurrent standards for sites and territories will apply.
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You may solicit customers, and use other methods of distribution, including the Internet, catalog sales, telemarketing, and other direct marketing, outside of your Protected Territory. Further, Byrider Franchising Partners or other franchisees may solicit customers inside your Protected Territory. You will not receive any compensation from Byrider Franchising Partners in connection with any production, distribution or sales described in this paragraph.
What This Means (2025 FDD)
According to Byrider's 2025 Franchise Disclosure Document, franchisees must license Byrider's Proprietary Computer Software and enter into a Software Services and User Agreement for ongoing service and support. This software is crucial for operating the Byrider business, as it includes programs for inventory tracking, vehicle repairs, customer information storage, financing assistance, credit checks, and accounting transactions. Byrider retains the sole right to service, update, and maintain this software and can deny access for specific causes like viruses or performance degradation. The software requirements ensure franchisees meet specific standards for networks, security, and hardware, which facilitates common services and minimizes disruptions across the franchise system.
Item 12 states that Byrider franchisees may or may not receive a protected territory. If a franchisee signs an Area Development Agreement and complies with its terms, they will be granted a protected territory where Byrider cannot license other franchises or open company-owned businesses. However, Byrider retains rights to add new programs, products, and services, and can still operate or franchise similar businesses under different names within the protected territory. The franchisee can solicit customers outside their protected territory, and Byrider or other franchisees can solicit customers inside the protected territory.
The required software licensing impacts a franchisee's ability to operate within their territory because it is essential for the day-to-day operations of the business. Without the licensed software, a franchisee cannot effectively manage inventory, process financing, or maintain customer records, which are all critical for running the business, regardless of whether they have a protected territory. Byrider's access to the data collected in the franchisee's files also allows them to monitor the franchisee's performance and compliance with the franchise agreement. The franchisee is responsible for the costs of installing, maintaining, and upgrading the technology at their location, including per-site fees for VPN clients and per-user fees for hosted services like email.