How is the Automated Reservation Fee for Budget determined?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Automated Reservation Fee. The Automated Reservation Fee will be determined in accordance with Schedule 3, as amended from time to time.
b. Third Party Automated Reservation Fee. This fee covers the reservation transmission fee for all reservations generated by third parties booked through their proprietary systems (also known as a Global Display System or "GDS" and referred to elsewhere in this Agreement as a "GDS") and processed through the Reservation System on Licensee's behalf. The current rates for this fee are indicated in Schedule 2 to Schedule F, which is attached hereto and incorporated herein by reference, and are subject to change as and to the extent that the GDS reservation fee rates that ABCR is required to pay changes.
- Year End Reconciliation. At the end of each calendar year, ABCR will prepare a profit and loss statement for the Reservation System, reconcile the applicable fees and expenses, and adjust such fees for the then current year including any retroactive adjustment to the beginning of the then current calendar year as follows:
Reservation Fee/Third Party Automated Reservation/Network Access/ Internet/Tour Direct Fees.
- (a) Credit Balance. If and to the extent the Reservation Fee, Third Party Automated Reservation, Network Access and Internet/Tour Direct Fees charged to all Budget licensees during the year exceed the corresponding expenses incurred during that year, the excess fees will be credited to the following year to offset future Reservation Fees and to reduce any increase in the Reservation Fee for such following year.
- (b) Deficit Balance. If and to the extent the Reservation Fee, Third Party Automated Reservation, Network Access and Internet/Tour Direct expenses incurred during the year exceed the total Reservation Fee, Third Party Automated Reservation, Network Access and Internet/Tour Direct Fees charged to all Budget licensees during the year, ABCR may recover the deficit amount by increasing the Reservation Fee upon 30 days written notice to the Licensee, subject to the limitations of Section II.1.(a) above.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the Automated Reservation Fee is determined in accordance with Schedule 3 of Schedule F, and may be amended from time to time. This fee specifically covers the reservation transmission fee for reservations generated by third parties through their proprietary systems, also known as a Global Display System (GDS). These reservations are then processed through Budget's Reservation System on behalf of the franchisee.
The fees are subject to change based on the GDS reservation fee rates that Avis Budget Car Rental (ABCR) is required to pay. This means that if ABCR's costs for using these third-party systems increase or decrease, the Automated Reservation Fee charged to franchisees will be adjusted accordingly.
At the end of each calendar year, ABCR will prepare a profit and loss statement for the Reservation System and reconcile the applicable fees and expenses. If the fees charged to Budget licensees exceed the expenses, the excess fees will be credited to the following year to offset future Reservation Fees. Conversely, if the expenses exceed the fees, ABCR may increase the Reservation Fee after providing 30 days written notice to the franchisee, subject to certain limitations. This reconciliation process ensures that the fees charged to franchisees are aligned with the actual costs incurred by ABCR in operating the Reservation System.