When does the Royalty Fee commencement date begin for a Byrider franchise?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
See Exhibit B for Franchisee's additional franchise category designation ("Additional Franchise Category")
- 3.9 Service Center. The term "Service Center" shall mean the service center located at the Business to service vehicles sold by Businesses in accordance with the Company's standards and specifications.
- 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. During the first year of operation of Franchisee's Business: $5,500 per month;
- B. During the second year of operation of Franchisee's Business: the greater of $6,700 per month or 1% of the Franchisee's Gross Sales (Byrider Vehicle Sales) for that month; and
- C. After the second year of operation of Franchisee's Business: the greater of $7,800 per month or 1% of the Franchisee's Gross Sales (Byrider Vehicle Sales) for that month.
The foregoing $7,800 minimum monthly payment provided in subsection (B) above will increase by 4.0% on January 1st of every other year (for example, it will increase by 4.0% on January 1, 2026 and increase by another 4.0% on January 1, 2028, etc.) throughout the Term (as defined in Section 5.1 below).
plus,
Gross Receipts (CNAC Collect
Source: Item 23 — Receipts (FDD pages 88–335)
What This Means (2025 FDD)
According to Byrider's 2025 Franchise Disclosure Document, the Royalty Fee commencement date is determined by whichever occurs first: either the date the franchisee's Byrider business opens to the public, or the one-year anniversary of the date of the Franchise Agreement. This means that a new Byrider franchisee will start paying royalty fees no later than one year after signing the agreement, even if their location isn't yet open.
This policy ensures that Byrider begins receiving royalty payments within a defined timeframe, regardless of how quickly the franchisee launches their business. For the franchisee, it's crucial to factor in this one-year deadline when projecting startup costs and revenue. If there are delays in opening the business, the franchisee will still be obligated to pay royalty fees, potentially impacting their initial profitability.
Franchisees should carefully consider the implications of this policy and plan their business launch accordingly. Understanding the timeline for opening the business and the corresponding commencement of royalty fees is essential for financial planning and ensuring a smooth start to the franchise operation. This is a fairly standard practice in franchising, as it ensures the franchisor receives revenue in a timely manner.