What section of the Byrider Franchise Agreement is deleted and replaced if a franchisee qualifies for the Multi-Location Flat Rate?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Multi-Location Flat Rate Royalty. In the event Franchisee qualifies for, or has previously qualified for and elected to pay, the Multi-Location Flat Rate ("MLFR"), the Company will allow Franchisee to pay the MLFR instead of the Royalty Fee described above in Sections 1-3 in accordance with the terms and conditions set forth below:
- A. Royalty Fee. Section 3.10 of the Franchise Agreement is hereby deleted in its entirety and replaced with the following:
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 the amount calculated monthly as follows:
Source: Item 22 — Contracts (FDD pages 87–88)
What This Means (2025 FDD)
According to Byrider's 2025 Franchise Disclosure Document, Section 3.10 of the Franchise Agreement, which pertains to the Royalty Fee, is deleted and replaced in its entirety if a franchisee qualifies for the Multi-Location Flat Rate (MLFR). This change is outlined in Item 22, which discusses various contracts and agreements related to the franchise. This modification allows franchisees who operate multiple Byrider locations and meet specific qualifications to pay a flat royalty rate instead of the standard royalty fee calculated as a percentage of gross sales.
This provision offers a potentially significant benefit to multi-unit Byrider franchisees, as it can simplify royalty calculations and potentially reduce overall royalty expenses. However, to qualify for and maintain the MLFR, franchisees must meet certain conditions, including maintaining at least 51% common equity ownership and voting control among their Byrider businesses. If a franchisee fails to meet these qualifications or comply with the Franchise Agreement, they will revert to paying the Royalty Fee as originally outlined in Sections 1-3 of the addendum.
The FDD also mentions that Byrider retains the right to increase the Volume Surcharge and Monthly Combined Royalty Cap based on the National Consumer Price Index for All Urban Consumers (CPI-U). Any such increases will be applied uniformly to all franchisees under the same form of franchise agreement, with written notification provided to franchisees by December 1st of each year regarding changes for the following calendar year. This adjustment mechanism ensures that royalty fees can be adjusted to reflect changes in economic conditions, potentially impacting the overall cost of operating a Byrider franchise.