For a Budget franchise, under what conditions is the payment of all initial fees deferred?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Applicable Law. The following language is added to Paragraph XII of the Rental System Agreement:
"This paragraph shall not be considered a waiver of any right conferred upon Licensee by Article 33 of the General Business Law of the State of New York."
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IN WITNESS WHEREOF, the parties have hereunto set their hands and seals on the date written below.
AVIS BUDGET CAR RENTAL, LLC.
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| d/b/a BUDGET RENT A CAR OF | |
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| ON BEHALF OF THE FOLLOWING RAC LOCATIONS: | |
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Mailing Address for Notice to Licensee. Attention: RETURN SIGNATURE COPY TO:
Avis Budget Car Rental, LLC. 379 Interpace Parkway Parsippany, NJ 07054 Attention: Office of General Counsel
RIDER TO BUDGET RENT A CAR SYSTEM, INC. LICENSE AGREEMENT FOR THE STATE OF NORTH DAKOTA
| This Rider is entered into this day of, 20 by and between | ||
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| BUDGET RENT A CAR SYSTEM, INC., a Delaware corporation ("BUDGET") and | ||
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Background. Budget and Licensee are .parties to that certain License Agreement dated __________________________, 20__ (the "Franchise Agreement") that has been executed concurrently with the execution of this Rider.
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- The parties wish to modify the Franchise Agreement, upon the terms and conditions set forth herein.
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- NOW, THEREFORE, the parties agree to amend the Franchise Agreement as follows:
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- Notwithstanding anything to the contrary set forth in the Franchise Agreement, and in particular Sections 7.1 and 7.2, payment of all initial fees is deferred until Franchisor has satisfied its pre-opening obligations and Franchisee's Franchised Business opens to the public.
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- "No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
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Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to the 2025 FDD, Budget outlines specific conditions under which the payment of initial franchise fees can be deferred. For franchisees in California, the collection of all initial fees is deferred until Budget has completed all pre-opening obligations and the franchisee is open for business. This condition was imposed by the Commissioner due to Budget not demonstrating adequate capitalization or showing reliance on franchise fees to fund operations. For California franchisees who sign a development agreement, the payment of development and initial fees attributed to a specific unit in the development schedule is deferred until that unit is open.
For franchisees in Washington, all initial fees are deferred until Budget has fulfilled its initial pre-opening obligations and the franchisee's franchised business is open to the public.
For franchisees in Minnesota, the payment of all initial fees is deferred until Budget has satisfied its pre-opening obligations to franchisees under the License Agreement and the franchisee's licensed business opens to the public.
In Illinois, payment of initial fees will be deferred until Budget has met its initial obligations to the franchisee, and the franchisee has commenced doing business. This financial assurance requirement was imposed by the Office of the Illinois Attorney General due to Budget's financial condition. Furthermore, according to the FDD, Budget and the Licensee can agree to modify the Franchise Agreement so that payment of all initial fees is deferred until Budget has satisfied its pre-opening obligations and the Franchisee's Franchised Business opens to the public.