Can a Budget Licensee terminate the agreement with or without cause?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
release will exclude thenexisting litigation between Licensee and Budget or the Related Entities and the then-existing claims of Licensee against Budget or the Related Entities in the ordinary course of business under this Agreement or any other agreement between such parties, which litigation and claims will be
identified in such release. If such conditions are not met within the prescribed time period referred to above prior to the expiration of the current term, such term will expire upon the Expiration Date previously established in accordance with this Paragraph 11.1. Budget agrees to provide Licensee with notice of the approaching expiration of any term and the documentation referenced above sufficiently in advance of such expiration date for Licensee to comply with the renewal provisions of this Paragraph 11.1.
- 11.2 Termination By Licensee. Budget agrees that Licensee may terminate this Agreement, with or without cause, effective one hundred and eighty (180) days after written notice of its election to so terminate is delivered to Budget. However, if, in any calendar month during that one hundred eighty (180) day period: (a) Licensee ceases to operate the Rental Business; or (b) Licensee's Gross Revenue is less than the average monthly Gross Revenue of the Rental Business during the preceding one (1) year period (or during the term of this Agreement if less than one year), then in lieu of the License Fees otherwise payable for the remainder of the one hundred eighty (180) day period, Licensee will pay Budget the Termination Fee. The "Termination Fee" shall equal: (i) six (6) times the amount of the average License Fees, which were payable by Licensee hereunder for the immediately preceding one (1) year period (or during the term of this Agreement if less than one year);
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, a licensee can terminate the agreement with or without cause. To do so, the licensee must provide Budget with a written notice of their election to terminate, which will be effective 180 days after the notice is delivered.
However, if the licensee ceases to operate the rental business or if their gross revenue is less than the average monthly gross revenue during the preceding year (or the term of the agreement if less than one year) in any calendar month during that 180-day period, the licensee will be required to pay Budget a Termination Fee. This Termination Fee is calculated as six times the average license fees payable for the immediately preceding year (or the term of the agreement if less than one year), multiplied by a fraction. The numerator of this fraction is the number of days between the event (ceasing operations) and the end of the 180-day period, and the denominator is 180.
It is important to note that the licensee's obligation to pay the Termination Fee does not affect any other rights or remedies that Budget may have under the agreement or otherwise. Furthermore, the FDD adds that the payment of the Termination Fee might not be enforceable under the Minnesota Franchises Law; however, Budget and Licensee agree to enforce the terms of this Paragraph 11.2 to the maximum extent that the law allows.