Under what conditions can a Byrider franchisee sell retail installment contracts to unaffiliated third parties?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
least two (2) additional Businesses under separate Franchise Agreements with the Company that are open to the public. In the event Franchisee fails to meet any of the foregoing conditions, Franchisee shall pay 1.90% of Franchisee's Gross Receipts (CNAC Collections) for the remaining Term of this Agreement.
plus,
Unaffiliated Assignment of Retail Installment Contracts. Franchisee may sell and assign retail installment contracts to unaffiliated third parties (each or collectively "Third Party"); provided, however: (i) Franchisee must obtain Company's approval of the Third Party, which Company shall not unreasonably withhold; and (ii) Franchisee may not sell or assign retail installment contracts with contract values, in the aggregate, of more than 20% of Franchisee's Gross Sales 12-month rolling monthly average.
Third Party Financed Sales Fee. Franchisee shall pay to Company $250 per contract sold or assigned a
Source: Item 16 — (FDD page 56)
What This Means (2025 FDD)
According to Byrider's 2025 Franchise Disclosure Document, a franchisee can sell and assign retail installment contracts to unaffiliated third parties under specific conditions. First, the franchisee must obtain Byrider's approval of the third party, which Byrider will not unreasonably withhold. Second, the franchisee cannot sell or assign retail installment contracts with contract values exceeding 20% of the franchisee's Gross Sales, calculated as a 12-month rolling monthly average.
These conditions ensure that Byrider maintains some control over who its franchisees are doing business with and that the franchisee doesn't become overly reliant on third-party financing, which could potentially harm the Byrider brand or create financial instability for the franchisee. The 20% limit based on a rolling average allows for some flexibility while preventing a franchisee from shifting a large portion of their business to third-party financing.
Additionally, Byrider requires franchisees to pay a Third Party Financed Sales Fee of $250 per contract sold or assigned at the time of the vehicle sale from the franchisee's dealer entity to the third party. There is also a Bulk Sale of Accounts Fee, which is equal to 1.90% of the gross amounts of Byrider-originated consumer retail installment contracts sold to a third party. These fees add to the cost of using third-party financing and likely incentivize franchisees to utilize Byrider's affiliated financing options when possible.
For a prospective franchisee, these stipulations mean that while they have the option to use third-party financing, they need to be aware of the approval process, the sales volume limitations, and the fees associated with this option. It would be prudent for a potential franchisee to discuss the typical approval process for third parties with Byrider and understand how the 20% limit is calculated and monitored to ensure compliance.