What happens if a Budget licensee fails to pay Reservation Fees when due?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
If Licensee fails to pay Reservation Fees when due, Budget may remove, suspend or block Licensee's right to receive reservations.
Licensee will pay Reservation Fees on or before the 20th day of each month for the preceding month.
Licensee will pay to Budget and the Related Entities (unless any such entity has a separate agreement for the payment of interest on amounts owed) interest on any monies which in any manner relate to the Rental Business and are not received by Budget or the Related Entities when due. Such interest will accrue, commencing with the day after any monies are due (as described in the Summary Pages (Section 10(i)) on amounts not paid when due. Any monies received by Budget or the Related Entities will first be applied against any outstanding interest balance and then against any other monies due from Licensee to Budget or the Related Entities. Late fees will be assessed against all amounts past due including past due late fees. Subject only to the last sentence of Paragraph 7.12, Budget will have the sole discretion to apply any payments made by Licensee to any past due indebtedness of Licensee. Budget and the Related Entities will have the right to set off any and all amounts Licensee owes Budget or the Related Entities against any amounts owed to Licensee by Budget, the Related Entities or any third party for which Budget acts as an intermediary or performs services, whether due under this Agreement or otherwise, or to establish a protocol or procedure for deducting any amounts which Licensee owes Budget, the Related Entities, or any third party for which Budget acts as an intermediary or performed services from payments that are owed to Licensee.
Any notice of default by Budget will specify the time period (if any) within which such failure or failures must be cured by Licensee, which Licensee agrees will be fifteen (15) days from the date of delivery of notice to Licensee in the case of all failures by Licensee to pay any sums owed to Budget and thirty (30) days from delivery in the case of failure of Licensee to adhere to any other provision of this Agreement or the Standards (except as otherwise set forth in Paragraph 11.4).
If Licensee fails to cure any such failure within the prescribed time period, this Agreement will terminate without further notice or action by Budget and upon expiration of the prescribed time period.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, if a licensee fails to pay Reservation Fees when due, Budget may remove, suspend, or block the licensee's right to receive reservations. This can significantly impact the franchisee's business, as reservations are a crucial source of revenue for a car rental service. The Reservation Fees are paid on or before the 20th day of each month for the preceding month.
Budget also charges interest on any monies related to the Rental Business not received when due, accruing from the day after the money is due. These monies are described in the Summary Pages (Section 10(i)). Any money Budget receives will first be applied against any outstanding interest balance and then against any other monies due from the licensee. Late fees will be assessed against all amounts past due including past due late fees.
Budget has the sole discretion to apply any payments made by the licensee to any past due indebtedness of the licensee, subject to the application of payments to outstanding interest balances first. Budget can also offset any amounts the licensee owes against any amounts owed to the licensee by Budget or any third party for which Budget acts as an intermediary. This gives Budget considerable power to manage payments and prioritize its receivables.
In addition to the actions Budget can take regarding reservations, failure to pay sums owed to Budget, including Reservation Fees, constitutes a default under the License Agreement. Budget will provide a notice of default specifying a 15-day period to cure the failure to pay. If the licensee fails to cure the failure within this period, the License Agreement will terminate without further notice or action by Budget. This could result in the loss of the franchise and the associated business.