Under what condition can a Byrider franchisee pledge the assets of their business without it being considered a 'Transfer'?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
- (5) pledge of this Agreement (to someone other than the Company) or an ownership interest in the Company or its owners as security, foreclosure upon the Franchisee's Business, or the Franchisee's transfer, surrender, or loss of the possession, control, or management of the Franchisee's Business; provided that Franchisee may pledge the assets of the Franchisee's Business to a lender in connection with obtaining financing for the Franchisee's Business.
Source: Item 23 — Receipts (FDD pages 88–335)
What This Means (2025 FDD)
According to Byrider's 2025 Franchise Disclosure Document, a franchisee can pledge the assets of their business to a lender in order to obtain financing without it being considered a transfer.
This exception to the transfer rules allows Byrider franchisees to secure necessary funding for their business operations without triggering the more extensive transfer approval processes. This is a common practice in franchising, as it enables franchisees to manage and grow their businesses effectively.
However, it's important to note that this exception applies specifically to pledging assets for financing purposes. Any other form of transfer or disposition of assets may still be subject to Byrider's standard transfer approval requirements, as outlined in the franchise agreement. Franchisees should carefully review the terms of their agreement and consult with Byrider to ensure compliance when considering any transaction involving their business assets.