Can Budget increase the insurance amounts required for a Budget licensee?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
Licensee will maintain such insurance, in such minimum amounts, and with such carriers as approved by Budget in its sole discretion or, as are prescribed in the Standards and in this Paragraph 9.4.
Licensee will annually provide a current certificate of insurance to Budget naming Budget and its affiliates as additional insureds as prescribed by Budget in the Standards, and the insurer must waive any subrogation rights it may have against Budget.
Budget may periodically increase the amounts of insurance carried by Licensee and require different or additional kinds of insurance to reflect inflation, changes in standards of liability, higher damages, Licensees specific claims history or other relevant circumstances.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, Budget has the authority to periodically increase the required insurance amounts for its licensees. This adjustment can be made to reflect factors such as inflation, changes in liability standards, higher potential damages, a licensee's specific claims history, or other relevant circumstances. This provision ensures that Budget licensees maintain adequate insurance coverage to protect both their business and the Budget brand from potential financial risks.
As a Budget franchisee, it is crucial to understand that the cost of insurance may fluctuate over time due to these factors. Budget also has the right to approve the insurance carriers used by the franchisee. Licensees are also required to provide Budget with an annual certificate of insurance, naming Budget and its affiliates as additional insured parties. The insurance provider must also waive any subrogation rights against Budget.
This requirement is typical in franchising, as franchisors need to ensure that all franchisees have sufficient insurance to cover potential liabilities, thus protecting the entire franchise system. Prospective franchisees should factor in potential increases in insurance costs when projecting their operating expenses. It would be prudent for a prospective franchisee to discuss with Budget what typical factors have caused insurance increases in the past and how frequently such adjustments have been made.