Can Budget terminate the agreement for cause?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
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); multiplied by (ii) a fraction, the numerator of which is the number of days between the occurrence of the event (a) above and the end of the one hundred eighty (180) day period, and the denominator of which is one hundred eighty (180). Licensee's obligation to pay the foregoing amount will not in any way affect any other rights or remedies of Budget arising under this Agreement or otherwise.
- 11.3 Termination By Budget With Prior Notice. Budget will have the right to terminate this Agreement for cause. In addition to the grounds described in Paragraph 11.4, cause for termination will be Licensee's failure to reasonably adhere to any provision of this Agreement, including the Standards, and to cure any such failure within the notice period hereinafter prescribed. Budget will not be limited to the reasons set forth in any notice of default or similar notice issued by Budget in any judicial proceeding in which the validity of the termination of this Agreement is at issue. Any notice of default by Budget will specify the time period (if any) within which such failure or failures must be cured by Licensee, which Licensee agrees will be fifteen (15) days from the date of delivery of notice to Licensee in the case of all failures by Licensee to pay any sums owed to Budget and thirty (30) days from delivery in the case of failure of Licensee to adhere to any other provision of this Agreement or the Standards (except as otherwise set forth in Paragraph 11.4). If Licensee fails to cure any such failure within the prescribed time period, this Agreement will terminate without further notice or action by Budget and upon expiration of the prescribed time period.
- 11.4 Termination By Budget Without Prior Notice. Budget will also, to the maximum extent permitted by law, effective upon written notice to Licensee, have the right at any time to terminate this Agreement immediately and without other cause, or prior action or notice by Budget to Licensee, if:
- (a) Licensee makes an assignment for the benefit of creditors;
- (b) Licensee makes a written admission of its inability to pay its debts or obligations as they become due;
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, Budget has the right to terminate the agreement for cause. Cause for termination includes the franchisee's failure to reasonably adhere to any provision of the agreement, including the standards outlined in the agreement. However, Budget must provide the franchisee with a notice period to cure the failure.
The notice of default provided by Budget will specify the time period within which the franchisee must cure the failure. For failures to pay any sums owed to Budget, the cure period is fifteen days from the date of delivery of the notice. For failures to adhere to any other provision of the agreement or the standards, the cure period is thirty days from delivery of the notice, unless otherwise specified in Paragraph 11.4. If the franchisee fails to cure the failure within the prescribed time period, the agreement will terminate without further notice or action by Budget upon expiration of the cure period.
Budget can also terminate the agreement immediately without prior notice if the franchisee makes an assignment for the benefit of creditors, makes a written admission of its inability to pay debts, files for bankruptcy (or has it filed against them and not dismissed within 60 days), or seeks or consents to the appointment of a trustee, receiver, or liquidator. These stipulations provide Budget with avenues to end the franchise agreement if the franchisee is unable to uphold their financial obligations or is in violation of the agreement.