In Minnesota, when does the franchisee have to pay all initial fees for a Budget franchise?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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, Minnesota franchisees do not have to pay initial fees until Budget has met its pre-opening obligations to the franchisee and the franchisee's business is open to the public. This deferred payment schedule is a modification to the standard franchise agreement.
This modification is important for prospective Budget franchisees in Minnesota because it reduces the upfront financial burden. Instead of paying the initial fees upon signing the agreement, franchisees can delay payment until they are closer to generating revenue. This can help with cash flow during the initial setup phase of the business.
This type of deferral is not standard across all franchises, as many franchisors require initial fees to be paid upon signing the agreement. The Minnesota-specific rule provides a financial benefit to franchisees in that state, aligning the payment of fees with the commencement of business operations.