When is the Initial License Purchase Fee due for a Budget franchise?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
those programs listed in the Summary Pages (Section 13), as such programs may be modified, replaced or instituted by Budget (including all other programs described in this Article VI, collectively, the "Programs"). Licensee agrees to support and service such Programs in accordance with the relevant provisions thereof, as required by the Standards, and to contribute to the expense thereof, if any, on the same basis as other similarly situated System licensees. Licensee may be required to enter into participation or other agreements to evidence its participation in such Programs.
FEES AND OTHER PAYMENTS
- 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.
- 7.2 License Fees. Licensee will pay to Budget by the tenth (10th) of each month: License Fees for the operation of the Rental Business, and other fees associated with the Rental
Business, in the amount set forth and in the manner identified in the Summary Pages (Section 10(b)).
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the standard procedure is that the Initial License Purchase Fee is due upon the execution of the License Agreement. Specifically, the franchisee will pay the Initial License Purchase Fee for the right to become the Network licensee in the Territory, with the amount and manner of payment detailed in the Summary Pages (Section 10(a)). Once the agreement is executed, these fees are considered fully earned by Budget and are non-refundable under any circumstances.
However, Item 23 of the 2025 FDD includes several state-specific amendments that defer the payment of initial fees under certain conditions. For instance, in Illinois, payment of initial fees is deferred until Budget has met its initial obligations to the franchisee and the franchisee has commenced business. Similarly, a general modification states that payment of all initial fees is deferred until Budget has satisfied its pre-opening obligations and the franchisee's business is open to the public.
These deferral modifications provide a significant benefit to prospective Budget franchisees by reducing the upfront financial burden. Instead of paying the initial fee immediately upon signing the agreement, franchisees in certain locations or under specific agreements can delay payment until Budget fulfills its pre-opening responsibilities and the franchise is operational. This can help franchisees manage their initial investment and cash flow more effectively, aligning the fee payment with the commencement of revenue generation.