If a Budget Licensee terminates the agreement, to whom must the written notice of termination be delivered?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
- 11.2 Termination By Licensee.
Budget agrees that Licensee may terminate this Agreement, with or without cause, effective one hundred and eighty (180) days after written notice of its election to so terminate is delivered to Budget.
However, if, in any calendar month during that one hundred eighty (180) day period: (a) Licensee ceases to operate the Rental Business; or (b) Licensee's Gross Revenue is less than the average monthly Gross Revenue of the Rental Business during the preceding one (1) year period (or during the term of this Agreement if less than one year), then in lieu of the License Fees otherwise payable for the remainder of the one hundred eighty (180) day period, Licensee will pay Budget the Termination Fee.
The "Termination Fee" shall equal: (i) six (6) times the amount of the average License Fees, which were payable by Licensee hereunder for the immediately preceding one (1) year period (or during the term of this Agreement if less than one year); multiplied by (ii) a fraction, the numerator of which is the number of days between the occurrence of the event (a) above and the end of the one hundred eighty (180) day period, and the denominator of which is one hundred eighty (180).
Licensee's obligation to pay the foregoing amount will not in any way affect any other rights or remedies of Budget arising under this Agreement or otherwise.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, a Budget licensee who chooses to terminate the License Agreement must deliver written notice of their decision to Budget. The termination becomes effective 180 days after Budget receives this notice.
However, there are financial implications to consider during this 180-day period. If the licensee stops operating the rental business or if their gross revenue falls below the average monthly gross revenue of the preceding year (or the term of the agreement if it's less than a year), the licensee must pay Budget a Termination Fee instead of the standard license fees. This fee is calculated based on six times the average license fees payable over the past year (or the agreement's term if shorter), multiplied by a fraction that considers the number of days remaining in the 180-day period after the event (cessation of business or revenue decline).
It's important to note that the licensee's obligation to pay this Termination Fee does not affect any other rights or remedies that Budget may have under the agreement or otherwise. This means that even after paying the Termination Fee, Budget may still pursue other legal or contractual remedies if the licensee has violated the agreement in other ways.