What are the specific obligations of a Byrider franchisee regarding the payment of taxes (as implied by obligations in Item 9) and how does this relate to the ongoing fees (Item 6)?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
nchisee is a trust, each trustee or beneficiary signing this Agreement shall be jointly or severally liable for all the obligations and duties of the Franchisee hereunder. Notice to or demand upon one Franchisee shall be deemed notice to or demand upon all Franchisees.
3.7 Gross Sales/Gross Receipts.
Gross Sales (Byrider Vehicle Sales). The term "Gross Sales (Byrider Vehicle Sales)" shall mean the full purchase price of all vehicles sold at retail (whether financed or sold for cash), including charges for vehicle service contracts, documentary fees, and all other fees or charges which accompany the sale, minus overallowances given on trade-in vehicles. For example, the customer's purchase price of the vehicle is $10,000 and the customer has a trade in with an actual cash value of $1,000 and assuming no vehicle service contract or other charges. However, the Franchisee offers $1,500 for the trade in. The "overallowance" is the amount offered of $1,500 less the actual cash value of $1,000 equaling $500. Therefore, "Gross Sales (Byrider Vehicle Sales)" in this example is the full purchase price of $10,000 less the overallowance of $500 which equals $9,500. "Gross S
What This Means (2025 FDD)
According to the 2025 Byrider Franchise Disclosure Document, while Item 9 outlines the franchisee's obligations, it does not explicitly detail the franchisee's direct obligations for the payment of taxes. However, Item 6 and other sections provide context regarding fees and financial responsibilities that indirectly relate to tax obligations. Specifically, the definition of "Gross Sales (Byrider Vehicle Sales)" excludes "all titling fees and taxes imposed by federal, state, or other governmental authority directly and collected from customers so long as it is actually paid by Franchisee to such governmental authority." This implies that Byrider franchisees are responsible for collecting and remitting certain taxes to the appropriate governmental authorities.
Item 6 details various fees that Byrider franchisees must pay, such as royalty fees, advertising fees, and technology fees. These fees are calculated based on a percentage of gross sales or gross receipts. The franchisee is responsible for accurately reporting their gross sales and gross receipts, as underreporting can lead to audits and penalties. If an audit reveals a discrepancy where the franchisee underpaid Byrider by more than 2% due to intentional or grossly negligent behavior, the franchisee may be required to pay three times the royalty and advertising fees due, plus interest and all audit-related expenses.
While the FDD does not explicitly state that franchisees must pay taxes, it does state that gross sales exclude taxes collected from customers and remitted to governmental authorities. This implies that franchisees are responsible for collecting and paying these taxes. Prospective franchisees should seek clarification from Byrider regarding their specific tax obligations and how these obligations interact with the various fees outlined in Item 6 to ensure full compliance and avoid potential penalties.