Under what condition does Byrider charge a penalty for underpayment of fees, and what is the amount of the penalty?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
- 9/ If an audit shows no discrepancy, Byrider Franchising Partners pays the cost of the audit. If discrepancy is shown, you pay the cost of the audit. You also immediately pay Byrider Franchising Partners the amount owed plus interest at the highest rate allowed by law. If the discrepancy shows that you underpaid Byrider Franchising Partners by more than 2%, and Byrider Franchising Partners concludes that the under payment was intentional or grossly negligent, you promptly pay Byrider Franchising Partners an amount equal to 3 times the Royalty Fees and/or the Advertising Fees that are due, as well as interest at the highest rate allowed by law and all costs and expenses related to the audit by Byrider Franchising Partners representatives including salaries, travel costs, room and board and travel fees.
Source: Item 6 — Other Fees (FDD pages 21–32)
What This Means (2025 FDD)
According to Byrider's 2025 Franchise Disclosure Document, Byrider may impose a penalty for underpayment of fees under specific circumstances revealed during an audit. If an audit reveals that a franchisee has underpaid Byrider by more than 2%, and Byrider concludes that the underpayment was intentional or grossly negligent, a penalty will be assessed.
The penalty is a significant one. The franchisee must promptly pay Byrider an amount equal to 3 times the Royalty Fees and/or the Advertising Fees that are due. In addition to this tripled amount, the franchisee is also responsible for interest at the highest rate allowed by law on the underpaid amount, plus all costs and expenses related to the audit. These audit-related costs include salaries, travel costs, room and board, and travel fees for Byrider representatives involved in the audit.
This penalty structure highlights the importance of accurate financial reporting and timely payments to Byrider. Franchisees should ensure they have robust accounting practices in place to avoid unintentional underpayments. The potential for a triple penalty, plus interest and audit costs, represents a substantial financial risk for Byrider franchisees who fail to meet their payment obligations or who are found to have intentionally underreported their sales or revenue.