How does the required software licensing from Byrider Franchising Partners (Item 8) affect the franchisee's ability to comply with data privacy regulations (as implied by obligations in Item 9)?
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.
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).
The Company's technology system is made up of four components: 1) Byrider Proprietary Software, 2) off-the-shelf software, 3) hardware, 4) Software as a Service (SaaS) platforms from third party providers as well as public cloud-based platforms, and 5) dealer management system with integrated mandatory Customer Relations Management provided at no additional cost to Franchisee. The Customer Relations Management assists with Agency and Direct Consumer Complaints. When Franchisee's franchised location receives an Agency Complaint (such as Better Business Bureau, Attorney General, Consumer Financial Protection Bureau, Media, or Private Attorney), Franchisee must investigate the complaint, forward the complaint to the Company's Customer Service, and timely respond to the Agency; when Franchisee's franchised location receives a Direct Consumer Complaint (i.e., Customer Service phone/email), Franchisee will investigate the complaint, resolve it directly, and timely report the results to Customer Service detailing the resolution or action taken. The Company's Compliance Department administers the Customer Service mailbox and phone line and tracks the complaints and responses. Franchisee is responsible for investigating, taking corrective action, and resolving these complaints.
Licensee shall not make any copies of the Licensed Software in whole or part. Licensee shall not make any copies of the Licensed Documentation in whole or part [beyond the number of copies necessary for its use of the License System]. In no event shall Licensee make any copy of the Licensed Documentation available to any person other than one of its employees or agents who are bound to maintain that information in confidence and have been instructed not to make the copy available to any person other than an employee or agent of Licensee who is similarly bound.
Licensor agrees to take commercially reasonable efforts to store, or cause to be stored, in a secure location remote from Licensor, additional copies of all records and Customer Data and any Licensor resources required to provide the Services, and additional tapes or disks necessary to reproduce all such records and Customer Data, as well as source or object code of all software included in the Licensed System on a reasonable periodic basis.
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 agreement dictates how franchisees can use the software, which includes programs for tracking inventory, storing customer information, processing financing, performing credit checks, and recording accounting transactions. Byrider retains unlimited independent access to the sales and vehicle repair information stored in the franchisee's files. This access is intended to help Byrider maintain standards and minimize security concerns across the franchise system. The software also includes a Customer Relations Management (CRM) system to assist with handling agency and direct consumer complaints, which Byrider's Compliance Department tracks. Franchisees are responsible for investigating, taking corrective action, and resolving these complaints. The CRM is provided at no additional cost to the franchisee.
Byrider's control over the software and data means franchisees must adhere to Byrider's standards for data handling and security. While the FDD does not explicitly detail data privacy regulations, the requirement to use Byrider's software and the company's access to franchisee data suggest that Byrider sets the policies and procedures for data privacy compliance. Franchisees are responsible for maintaining a secure environment, including regular patching of operating systems and software, and may be required to update technology to meet evolving standards. Byrider also takes commercially reasonable efforts to store additional copies of all records and Customer Data in a secure location remote from Licensor.
This arrangement centralizes data privacy management, potentially reducing the burden on individual franchisees to develop their own compliance programs. However, it also means franchisees must rely on Byrider to implement and maintain adequate data privacy measures. Franchisees should ensure they understand Byrider's data privacy policies and how the software helps them comply with relevant regulations. The franchisee is prohibited from copying the licensed software or documentation, ensuring that the software's use remains controlled and consistent across the franchise system. Franchisees must also properly mark and display copyright notices on any copies of the licensed documentation they make, further emphasizing Byrider's ownership and control over the software and related materials.