What happens if a Budget Licensee does not pay monies related to the Rental Business when due?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
License Fees and any other payments due Budget or any of the Related Entities under this Agreement or any other agreement between the parties are transferred electronically from Licensee's bank account to the bank or other financial institution specified by Budget, all of which will be in accordance with the Standards; provided, however, in no event will Budget have the right to access Licensee's bank account directly.
(a) System Fees. Licensee will pay System Fees to Budget on or before the 15th day of each month for the preceding month.
(b) Reservations Fees. Licensee will pay Reservation Fees on or before the 20th day of each month for the preceding month.
7.12 Interest on Monies Past Due. 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.
7.13 Application of Payments. 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.
DEVELOPMENT OF TERRITORY
- 8.1 Location and Vehicles. Licensee agrees to develop the Territory to achieve and maintain the maximum possible market penetration for the Rental Business by opening Locations by the dates, and in the local markets and commercial airports listed in the Summary Pages (Section 4), and to actively and continuously operate the Rental Business at all of those Locations throughout the term of this Agreement; except that upon forty-five (45) days prior written notice to Budget, Licensee may cease operating the Rental Business at any commercial airport listed in the Summary Pages (Section 4), without being in default of this provision, in the event all airlines eliminate service at such airport. To further achieve and maintain the maximum possible market penetration within the Territory, Licensee agrees to maintain at least the number of Vehicles available for rent within the Territory by the dates listed in the Summary Pages (Section 11) ("Market Penetration Quotas"). To determine the Market Penetration Quotas, Budget will rely upon factors such as population increases and the presence or absence of an airport. Budget may use accepted industry parameters, census tracts, population densities, zip code boundaries, buying patterns, traffic counts and projected commercial and residential growth to determine computations for adjusting Market Penetration Quotas. The Location and Vehicle requirements identified in the Summary Pages (Sections 4 and 11) reflect the minimum market penetration acceptable to Budget.
- 8.2 Licenses, Concession Agreements, Leases and Permits.
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 monies related to the rental business when due, they will incur interest on the past due amount. This interest accrues starting the day after the payment is due. Any payments Budget receives will first be applied to outstanding interest balances before being applied to other outstanding monies. Late fees will also be assessed on all past due amounts, including any past due late fees. Budget has the discretion to apply payments to any past due debts.
Budget also has the right to offset any amounts the licensee owes against any amounts Budget or related entities owe to the licensee. This includes amounts owed by third parties for which Budget acts as an intermediary. Budget can also establish a protocol for deducting amounts owed to Budget from payments owed to the licensee.
Furthermore, if a Budget licensee is in default of their obligations, Budget has the right to assume management of the rental business if they determine that the business is being operated in a way that threatens the goodwill of the network or jeopardizes customer goodwill or safety. Budget will provide five days written notice before assuming management. All funds from the operation of the rental business during Budget's management will be kept in a separate fund, and all expenses, including compensation for Budget's appointed manager, will be charged to this fund. Budget can also charge a reasonable management fee during this period. Licensee agrees to indemnify Budget from any claims arising out of the acts or omissions of Budget in connection with the management of the Rental Business, except those involving gross negligence or willful misconduct of Budget or its representatives.
In the event of a failure to pay any sums owed to Budget, the licensee has fifteen days from the date of delivery of notice to cure the failure. If the licensee fails to cure the failure within the prescribed time period, the agreement will terminate without further notice or action by Budget upon expiration of the prescribed time period.