What happens if a Budget franchisee fails to pay travel agent commissions when due?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
If such commissions are not timely paid, Budget will have the right, but not the duty, to pay such commissions and bill Licensee for such commissions.
Should Licensee fail to pay travel agent commissions when due, Budget has the right to cease all reservations which Budget, or any third party, transmits to Licensee until all amounts due to Budget or any third party are paid in full.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, if a franchisee fails to pay travel agent commissions when they are due, Budget has the right, but not the duty, to pay those commissions and then bill the franchisee for the amount. Additionally, Budget can cease all reservations transmitted to the franchisee by Budget or any third party until all outstanding amounts owed to Budget or any third party are paid in full. This policy ensures that travel agents are compensated for their referrals and protects Budget's relationships with these agents.
Budget also has a centralized system for paying travel agents and other groups for referral business to franchisees. Franchisees are required to reimburse Budget for these amounts, including adhering to the terms of credit and incentive programs like frequent flyer programs. This system ensures consistent and reliable commission payments, which can be crucial for maintaining positive relationships with travel agencies and other referral sources.
Furthermore, Budget licensees must adhere to the company's commission calculation policy, which involves paying travel sources a percentage of net time and mileage charges. The standard commission is 10% for leisure business and 5% for contracted business, including corporate accounts with less than $100,000 in revenue. Corporate accounts generating over $100,000 in annual revenue do not earn commissions. Budget can also select individual travel sources or groups for unique commission arrangements as part of specific promotions or programs. These commissions may be a percentage of revenue, a flat dollar amount, or any other method selected by Budget.
Budget also has an automatic payment system. If a Budget licensee does not provide required information regarding time, mileage, and commission percentage, ABCR will pay the travel source commission based on estimated rental amounts on the reservation. A processing fee of $5.00 per reservation is assessed to cover administrative fees. Licensees can avoid this AutoPay Penalty by timely reporting the status of commissionable reservations or responding to the Commission Exception Report as required.