What is the interest rate Budget charges on unpaid invoices, and when does this interest start accruing?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
| Name of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Current Intercity Program Revenue Fees and Expenses | 60% - 75% of the revenue per reservation | As agreed | Revenue from participation in the Inter City Program is split between the Owning and Renting Cities (in the case of local rental, the owner receives 75% of the revenue and in the case one one-way rental, the owner received 60% |
| Interest on unpaid invoices | 18% per annum, or the highest rate permissible by law | When invoice is open more than 30 days | Interest accrues per annum from date of invoice. |
Source: Item 6 — OTHER FEES(1) (FDD pages 17–29)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, if a franchisee's invoice remains unpaid for more than 30 days, Budget will charge interest. The interest rate is 18% per annum, or the highest rate permissible by law.
This interest begins accruing from the original date of the invoice, not just from the date it becomes overdue. This means that even though there's a 30-day grace period before interest is applied, the interest calculation goes back to the invoice date.
For a prospective Budget franchisee, this highlights the importance of managing invoices and payments promptly to avoid incurring interest charges. The 18% annual interest rate is a significant cost that can impact profitability, so franchisees need to ensure timely payments to Budget.