During the term of the Byrider agreement, can a franchisee's family member have an ownership interest in a Competitive Business?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee and its owners agree that, during this Agreement's term, neither Franchisee, nor any owner, nor any member of Franchisee's or an owner's immediate family will:
- (a) have any direct or indirect, controlling or non-controlling interest as an owner (whether of record, beneficial or otherwise) in, or as a landlord of, a Competitive Business (defined below), wherever located or operating;
- (b) perform services as a director, officer, manager, employee, consultant, representative or agent, or in any other capacity, for a Competitive Business, wherever located or operating;
- (c) recruit or hire any employee of Company, Company's affiliates or Company's franchisees without obtaining prior written permission from such employer; or
- (d) divert or attempt to divert any actual or potential business or customer of the Franchisee's Business to a Competitive Business.
The term "Competitive Business" means any business (other than a Business being operated pursuant to a franchise agreement with the Company) which: (i) offers leasing or sells used automobiles, while retaining the retail installment contract or lease, (ii) operates itself as a provider of buy here pay here or lease financing whereby the selling dealer who originates retail installment contracts or leases and the assignee of the retail installment contracts or leases have some common equity ownership; (iii) provides vehicle repair services; or (iv) grants franchises or licenses to operate a business covered by the terms of (i), (ii) or (iii) of this subsection.
Source: Item 23 — Receipts (FDD pages 88–335)
What This Means (2025 FDD)
According to the 2025 Byrider Franchise Disclosure Document, during the term of the franchise agreement, neither the franchisee, any owner, nor any member of the franchisee's or an owner's immediate family is allowed to have any direct or indirect interest as an owner in a Competitive Business. This restriction applies regardless of where the Competitive Business is located or operating.
A "Competitive Business" is defined as any business that offers leasing or sells used automobiles while retaining the retail installment contract or lease. It also includes businesses operating as a provider of buy here pay here or lease financing where the selling dealer who originates retail installment contracts or leases and the assignee of the retail installment contracts or leases have some common equity ownership. Additionally, businesses that provide vehicle repair services or grant franchises or licenses to operate a business covered by the terms mentioned earlier also fall under the definition of a Competitive Business.
This non-compete clause is a significant restriction for Byrider franchisees and their families. It prevents them from investing in or operating any similar business during the term of the franchise agreement. This is designed to protect Byrider's market share and prevent franchisees from using Byrider's confidential information or business model to benefit a competing business. Prospective franchisees should carefully consider this restriction and ensure that they and their immediate family members are not involved in any conflicting business ventures before signing the franchise agreement.