Byrider Franchise Costs $947K – $1.6M (+ 2024 Profits)

Byrider, founded in 1989 by James DeVoe, is a recognized leader in the used car dealership and finance franchise industry in the United States. Originally established under the name J.D. Byrider, the company underwent a significant rebranding in 2019, adopting the Byrider name to reflect its evolving business model and commitment to customer service.

Headquartered in Carmel, Indiana, Byrider distinguishes itself through a unique “buy here pay here” model which integrates vehicle sales with in-house financing options, allowing customers who may have been declined traditional bank financing the opportunity to purchase vehicles.

The franchise system began to expand shortly after its inception, supported by a proprietary dealer management system that integrates and automates various operational aspects, enhancing the efficiency and service capability of each franchise. 

Expenditures	Amount
Initial Franchise Fee	$60,000
Starter Kit	$0 – $2,500
Rent (3 months)	$30,000 – $60,000
Furniture, Fixtures and Equipment	$1,500 – $50,000
Service Center Equipment	$2,000 – $70,000
Signs and Awnings	$2,000 – $50,000
Security Deposit for Property and Utilities	$2,000 – $10,000
Opening Inventory of Vehicles	$75,000 – $100,000
Advertising and Grand Opening	$18,500 – $30,000
Technology/Phone/Security Systems	$5,000 – $40,000
Bonds, Licenses and Business Permits	$1,000 – $5,000
Additional Funds – 6 months	$750,000 – $1,100,000
Total Estimated Initial Investment	$947,000 – $1,578,000

Note: The table above provides a snapshot of the main costs associated with starting the most common franchise format (as disclosed in the Item 7 of the Franchise Disclosure Document). For a complete overview of all the expenses involved with the various formats offered by the franchisor, please consult the Franchise Disclosure Document.

Initial Franchise Fee

The initial franchise fee for Byrider Franchising is $60,000.

Royalty Fee

Byrider franchises charge a royalty fee calculated as the greater of $6,000 or 2.5% of gross sales from vehicle sales, with a monthly cap of $8,500 for “Legacy Founder” and “Interim Founder Franchisees,” and $10,000 for “Legacy Interim Founder” and “Standard Franchisees.” After the first year of operation, the fee is either $7,800 or 1% of gross sales, whichever is higher. This minimum of $7,800 is subject to a 4% increase every two years starting January 2025.

Marketing/Advertising Fee

A National Advertising Fund may be established by Byrider Franchising for national advertising efforts. If established, franchisees must contribute as required, but the combined contributions to this fund and local advertising requirements will not exceed 4% of gross sales from Byrider Vehicle Sales.

Transfer Fees

The transfer fee is $5,000.

Training and Retraining Fees

• Initial training for additional employees: $2,500 per person.
• Other various training courses typically range from $500 to $1,500 per course.

Franchise pros and cons

The Pros:

• Absentee ownership: The franchisees have the freedom to take active roles in their businesses or manage them from afar.
• Comprehensive training: The brand offers its franchisees extensive in-person, online, and onsite training programs including resources to help them learn how to start and manage their businesses. Also, they are trained in sales, service, finance, accounting and personnel management.
• Flexible business model: Franchisees can benefit from a flexible business model with different entry points that allows them the freedom to pursue what befits their budgets. 
• Real estate and site selection: Byrider provides its franchisees with site selection assistance to identify a viable business location considering customer demographics and competition. It also helps them with the lease negotiations, design layouts and construction of their centers.
• Exclusive territory protection. Byrider grants its franchisees the right to operate in a protected area. Under the agreement, it does not license any other franchise or operate a competing business in the agreed upon location.
• Financing assistance: The franchisor has relationships with third-party partners to fund its franchisees’ startup costs, franchise fees, equipment, inventory and payroll.
• Marketing and advertising: The franchisor provides its franchisees with publicity and branding tools and resources to attract customers and maintain high sustainability levels. These include local store campaigns, national media, online advertising, loyalty program apps, regional advertising and a dedicated webpage.
• Technology: The franchisor provides its franchisees with proprietary sales CRM to ensure they are backed by verified and centralized information. In addition, it continues to invest in technology upgrades to help them operate smoothly.

The cons:

• Not a home-based business. The franchise cannot be operated from a mobile unit or home. Franchisees must have an office space, warehouse or retail facility.
• Lack of global presence: Byrider does not have locations globally, making it difficult to market to franchisees outside the US.
• Competition: The franchise faces stiff competition from brands such as Sheehy Auto, Auto Sales Directory and Off Lease Only Inc.

How to open a Byrider franchise

Opening a Byrider franchise involves several steps, designed to ensure you are a good fit for the franchise. Here are the main steps to follow to open a Byrider franchise.

1: Research the Franchise

• Understand the Business Model: Learn about Byrider’s integrated car sales and financing model.
• Evaluate Your Market: Research the demand for used cars and in-house financing in your desired location.
• Review Financial Requirements: Consider the initial investment, ongoing fees, and financial performance of existing franchises.

2: Contact Byrider

• Initial Inquiry: Reach out through Byrider’s official website or contact their franchise development team to express your interest.
• Request Franchise Information: Obtain detailed franchise information, typically provided through a Franchise Disclosure Document (FDD).

3: Submit Your Application

• Complete the Application: Fill out the franchise application form with your personal and business information.
• Undergo a Background Check: Expect a thorough review of your financial and criminal background to assess your suitability.

4: Attend Discovery Day

• Visit a Byrider Location: Attend a Discovery Day at a corporate location or a successful franchise to see the business in action.
• Meet Existing Franchisees: Talk to current franchise owners to get insights into the day-to-day operations and challenges.

5: Secure Financing

• Assess Your Financial Options: Explore financing options if necessary, which may include loans, partnerships, or personal funds.
• Byrider Support: Utilize any financing support or guidance offered by Byrider, which might include lender introductions or financial modeling.

6: Sign the Franchise Agreement

• Review the Agreement: Carefully read and understand the terms of the Franchise Agreement.
• Obtain Legal Advice: Consider consulting with a franchise attorney to ensure all terms are clear and favorable.

7: Choose a Location

• Site Approval: Work with Byrider to find and approve a suitable location based on traffic, demographics, and local market conditions.
• Lease or Purchase: Secure the location through leasing or purchasing, following Byrider’s guidelines and approvals.

8: Set Up Your Dealership

• Facility Setup: Build or remodel your location according to Byrider’s branding and operational guidelines.
• Staffing: Hire and train employees, focusing on sales, finance, and service departments.

9: Complete Training

• Attend Training Programs: Participate in comprehensive training programs provided by Byrider, which cover sales, finance, management, and operations.
• On-Site Assistance: Receive on-site support from Byrider representatives to ensure a smooth start.

Disclaimer

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