What royalty fee structure will apply to the License Agreement executed by the transferee of a Budget license?

According to Budget's 2025 Franchise Disclosure Document, the royalty fee structure applied to the License Agreement executed by the transferee will mirror that of the transferring licensee's existing Budget License Agreement. This means that when a Budget franchisee transfers their license to a new owner, the new franchisee will operate under the same royalty terms as the previous owner.

This consistency in royalty fees can be beneficial for both the transferring franchisee and the incoming franchisee. The transferring franchisee doesn't need to renegotiate royalty terms during the transfer process, and the incoming franchisee has a clear understanding of the financial obligations from the outset. This can streamline the transfer process and reduce potential conflicts or uncertainties regarding ongoing fees.

However, it's important for a prospective Budget franchisee to thoroughly review the existing License Agreement of the transferring franchisee to fully understand the royalty fee structure they will be assuming. This includes understanding how the fees are calculated (e.g., as a percentage of gross revenue), when they are due, and any other specific terms related to royalty payments. Additionally, the new franchisee will be required to execute and comply with the terms of Budget's then-current License Agreement, Programs, and any terms of Budget's Conditional Consent Letter, so understanding all these documents is crucial.