How do the insurance obligations for a Budget franchisee in Item 9 relate to the initial fees paid in Item 5?
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 l
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, Item 9 outlines the franchisee's obligations, including insurance requirements, while Item 5 details the initial fees. Item 9 specifies the types and minimum amounts of insurance a franchisee must maintain, such as Fleet Insurance with $100,000 / $300,000 bodily injury coverage and $50,000 property damage coverage, Lessor’s / Owner’s Excess Liability Insurance with $1,000,000 combined single limit per occurrence, and General Liability Insurance with $1,000,000 combined single limits. The franchisee is obligated to secure and maintain these insurances as per Article 9.4 of the Budget License Agreement and related regulations. Item 5 is not provided, so the relationship between the fees and insurance obligations cannot be determined.
While the FDD excerpt details the insurance obligations in Item 9, it does not specify how these obligations are financially linked to the initial fees outlined in Item 5. The initial fees cover various aspects such as the initial license purchase fee, training, and defraying the costs of obtaining and screening franchisees. However, it's unclear if any portion of these initial fees is allocated towards covering or offsetting the insurance expenses a franchisee will incur.
A prospective Budget franchisee should inquire with the franchisor about whether any portion of the initial fees is earmarked to cover or subsidize the insurance obligations. Understanding this financial relationship is crucial for budgeting and assessing the overall cost of investment. Specifically, it would be beneficial to know if there are any programs or arrangements where the franchisor assists franchisees in securing insurance coverage at a discounted rate or if the initial fees contribute to a group insurance plan.