If Budget elects to accept assignment of the Concession, what terms and conditions will Budget's concession contain?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
other parties.
- 4. Assignment. Concessionaire hereby acknowledges that Licensee has agreed under the License Agreement that, in the event of termination, for any reason, or Licensee's default under the Concession, Licensee will, at Budget's option, assign to Budget or Budget's designee any and all interest of Licensee in the Concession, including any rights to renew the Concession or to sublease the Premises; and Concessionaire hereby consents to such assignment, subject to the following conditions:
- (i) Budget will notify Concessionaire in writing within thirty (30) days after termination or expiration of the License Agreement or Budget's receipt of any notice of default by Licensee under the Concession if Budget elects to accept assignment of the Concession; Budget's failure to accept assignment of the Concession upon any default of Licensee under the Concession, will not be deemed a waiver of Budget's future right to accept such assignment in the event of any future default of Licensee;
- (j) If Budget elects to accept assignment of the Concession, Budget will execute and deliver to Concessionaire a concession containing the same terms and conditions (including concession fees) as the Concession; provided, however, that Budget's concession interest will not be subject to any defaults or claims that may then exist between Concessionaire and Licensee;
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, if Budget chooses to accept the assignment of the Concession, the concession agreement between Budget and the Concessionaire will mirror the terms and conditions of the original Concession agreement between the Concessionaire and the Licensee (franchisee). This includes the concession fees. However, Budget's interest in the concession will not be subject to any existing defaults or claims between the Concessionaire and the Licensee.
In practice, this means that Budget steps into the shoes of the franchisee (Licensee) concerning the Concession agreement. The Concessionaire (the entity granting the concession, such as an airport authority) must treat Budget as if it were the original franchisee, adhering to the same fee structure and operational terms. This protects Budget by ensuring consistent terms if a franchisee defaults and Budget takes over the concession.
However, it is important to note that Budget is not responsible for the Licensee's (franchisee's) defaults under the original Concession agreement. The Concessionaire retains the right to pursue the former Licensee for any outstanding amounts or breaches of contract. This clause ensures that Budget's assumption of the Concession is clean, without inheriting the financial baggage of the previous franchisee. Budget must notify the Concessionaire in writing within 30 days of the termination or expiration of the License Agreement or Budget's receipt of any notice of default by Licensee under the Concession if Budget elects to accept assignment of the Concession and will take possession of the Premises within thirty (30) days after notice of such election to Concessionaire.