When is the Initial License Purchase Fee due to Budget?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
7.1 Initial License Purchase Fee. Licensee will pay to Budget an Initial License Purchase Fee for the right to become the Network licensee in the Territory in the amount set forth and in the manner identified in the Summary Pages (Section 10(a)) upon execution of this Agreement. Such fees are fully earned by Budget upon execution of this Agreement and are not refundable, in whole or in part, under any circumstances.
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- Initial License Purchase Fee. Notwithstanding anything contrary in Section 7.1, the payment of all initial fees is deferred until Budget has satisfied its pre-opening obligations to Franchisees under the License Agreement and Franchisee's Licensed Business opens to the public.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the Initial License Purchase Fee is generally due upon the execution of the License Agreement. Specifically, the franchisee must pay the Initial License Purchase Fee for the right to become a Network licensee in the Territory, with the amount and manner of payment detailed in the Summary Pages (Section 10(a)). This fee is considered fully earned by Budget upon the agreement's execution and is non-refundable under any circumstances.
However, there is an exception to this general rule. The FDD states that the payment of all initial fees is deferred until Budget has satisfied its pre-opening obligations to franchisees under the License Agreement and the franchisee's licensed business opens to the public. This means that a new franchisee will not be required to pay the initial fees upfront but rather after Budget has fulfilled its obligations and the franchisee's business is ready to commence operations.
This deferred payment structure could be advantageous for prospective Budget franchisees as it reduces the initial financial burden and aligns the payment of fees with the progress of setting up the business. It also provides some assurance that the franchisee will only pay the fee once Budget has met its pre-opening obligations. Franchisees should carefully review Section 10(a) of the Summary Pages to understand the exact amount and specific payment terms for the Initial License Purchase Fee.