How long is the initial term of the Budget Agreement?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
11.1 Term. This Agreement will commence upon the Effective Date and, unless sooner terminated as hereinafter provided, remain in force until the Expiration Date identified in the Summary Pages (Section 8). Thereafter, this Agreement may renew, for successive five (5) year terms for a Renewal Fee identified in the Summary Pages (Section 10(r)) in advance of such renewal. Each successive five (5) year term shall commence upon the expiration of the previous term, provided that the following conditions are met at least thirty (30) days prior to the expiration of the applicable term: (a) Licensee is not then in default of any provision of this Agreement or the then-current form of License Agreement of Budget; (b) Licensee is then owned by the same beneficial owners as own Licensee currently or by their Permitted Transferees (as defined in Paragraph 12.2(b)); (c) Licensee signs the then-current form of License Agreement, appropriately amended to reflect the material economic terms contained within the then-current form of License Agreement, where applicable; (d) Licensee upgrades the Rental Business to conform to any then-current System Standards and specifications, and (e) Licensee and its owners sign a general release, in a form satisfactory to Budget, of any and all claims against Budget and its Related Entities and their respective shareholders, officers, directors, employees, agents, representatives, successors and assigns; provided, however, such general 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.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the Budget Agreement commences on the Effective Date and remains in force until the Expiration Date identified in the Summary Pages (Section 8). The agreement may then be renewed for successive five-year terms, provided certain conditions are met. These conditions include not being in default of any provision, maintaining the same beneficial owners, signing the then-current form of the License Agreement, upgrading the Rental Business to conform to current System Standards, and signing a general release of claims against Budget.
To renew the Budget agreement, these conditions must be met at least thirty days prior to the expiration of the current term. If these conditions are not met, the term will expire on the previously established Expiration Date. Budget agrees to provide the licensee with notice and necessary documentation in advance of the expiration date to allow compliance with the renewal provisions.
This means that as a prospective Budget franchisee, the initial term length is determined by the Expiration Date listed in Section 8 of the Summary Pages. Franchisees in good standing have the option to renew for additional five-year terms if they meet Budget's requirements. It is important to carefully review Section 8 and Section 10(r) of the Summary Pages, as well as Paragraph 11.1, to understand the initial term length, renewal fees, and conditions for renewal.