Where in the Budget License Agreement can I find information about the initial fee deferral?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
- Notification of Infringement/Claim. The third sentence of Paragraph 2.2 of the License Agreement is deleted in its entirety and replaced by the following:
"Licensee agrees that Budget shall have sole discretion to take such action as it deems appropriate and the right to control exclusively any litigation or administrative proceeding arising out of any such infringement, challenge or claim or otherwise relating to any Budget Trademark, in accordance with Minn. Stat. Sec. 80C.12, Subd. 1(g)."
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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, details regarding the deferral of the initial license purchase fee can be found in Item 23, specifically in the section addressing receipts. It states that the payment of all initial fees is deferred until Budget has fulfilled its pre-opening obligations to the franchisee as outlined in the License Agreement, and until the franchisee's licensed business is open to the public.
This deferral of the initial license purchase fee is a notable benefit for prospective Budget franchisees. It alleviates some of the upfront financial burden typically associated with starting a franchise. Instead of paying the initial fee immediately upon signing the agreement, franchisees can delay payment until Budget has provided the necessary support and the business is ready to commence operations.
However, it's important to understand the conditions attached to this deferral. The payment is contingent upon Budget meeting its pre-opening obligations, which may include site selection assistance, training, and providing operational manuals. Additionally, the franchisee must have their licensed business open to the public before the initial fee becomes due. Franchisees should clarify with Budget what constitutes fulfillment of these pre-opening obligations to ensure they are fully aware of the payment timeline.
Furthermore, prospective franchisees should note that this deferral may not be standard across all franchise systems. Many franchisors require the initial fee to be paid upfront as a commitment from the franchisee. The fact that Budget offers this deferral could be an attractive feature for those seeking to minimize their initial investment.