What happens if a Budget licensee fails to maintain the required insurance?

According to Budget's 2025 Franchise Disclosure Document, failing to maintain the insurance coverage required by Paragraph 9.4 of the agreement constitutes a breach of the license agreement. Specifically, Item 23(h) states that this failure is a cause for default under the agreement.

This means that Budget has grounds to take action against the licensee. While the document does not explicitly detail the specific remedies Budget may pursue, it is common in franchising that such a breach could lead to penalties, suspension of certain rights, or even termination of the franchise agreement. The franchisor typically outlines the specific steps they can take in the event of a default in other sections of the FDD.

Prospective Budget franchisees should carefully review Paragraph 9.4 to understand the specific insurance requirements, including the types and amounts of coverage required, as well as the approved carriers. It is also important to understand the full implications of a default under the agreement, including the potential for termination and the loss of the franchise. Franchisees should ensure they can consistently meet these insurance obligations to avoid potential penalties or termination of their agreement.