How do the insurance obligations for a Budget franchisee in Item 9 relate to the estimated initial investment costs outlined in Item 7?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
chise. Except as stated above, neither we nor any of our affiliates are currently approved suppliers.
Insurance.
| Type of Insurance | Minimum Amount |
|---|---|
| Fleet Insurance | $100,000 / $300,000 bodily injury and$50,000 per occurrence for property damage, or such other amounts as are required by local law. |
| Lessor’s / Owner’s Excess Liability Insurance | $1,000,000 combined single limit per occurrence |
| General Liability Insurance | $1,000,000 combined single limits |
ITEM 9 FRANCHISEE'S OBLIGATIONS
**This table lists your principal obligations under the license and other agreements.
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, Item 7 includes estimates for vehicle insurance premiums as part of the initial investment. These premiums are influenced by factors such as the initial fleet size, vehicle mix, the state where the vehicles are insured, and whether the insurance is part of an assigned risk pool. Budget estimates these costs to be between $2,000 and $5,000 per vehicle per year, calculated based on monthly installments for the first three months of operation.
Item 9 outlines the franchisee's obligation to maintain certain types and minimum amounts of insurance. This includes fleet insurance with a minimum of $100,000 / $300,000 for bodily injury and $50,000 per occurrence for property damage (or as required by local law), Lessor’s / Owner’s Excess Liability Insurance of $1,000,000 combined single limit per occurrence, and General Liability Insurance of $1,000,000 combined single limits.
The insurance obligations in Item 9 directly impact the initial investment costs detailed in Item 7. The estimated insurance costs in Item 7 are based on providing coverage for vehicle damage, theft, and third-party liability. The minimum coverage amounts specified in Item 9 dictate the level of insurance a franchisee must obtain, which in turn affects the actual premium costs. Franchisees need to factor in these required insurance levels when budgeting their initial investment to ensure they meet Budget's requirements and comply with local laws.
Therefore, while Item 7 provides an estimated range for insurance costs, franchisees must refer to Item 9 to understand the mandatory minimum coverage requirements. These requirements will influence the final insurance premiums and, consequently, the total initial investment needed to start the Budget franchise.