Under what circumstance would a Budget franchisee incur a fee related to 'Miscellaneous Compensation', and what is the corresponding reference number?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
11.10 Temporary Operation of Business. If, during any period in which Licensee is in default of any of its obligations under this Agreement, Budget determines, in its sole discretion, that the Rental Business is being operated in a manner that threatens to impair the goodwill of the Network or jeopardize customer goodwill or safety, Budget will have the right, at its option and upon five (5) days' written notice, to assume management of the Rental Business and/or elect to service any or all of Licensee's customers, including National Accounts, within the Territory from one or more locations determined by Budget. Budget will thereafter have the right to continue such management or service until it determines, in its sole discretion that the circumstances under which Budget has assumed such management or service will have been corrected by Licensee and Licensee is otherwise in good standing under this Agreement. All funds from the operation of the Rental Business during the period of Budget's management will be kept in a separate fund and all expenses of the Rental Business, including compensation, other costs and travel and living expenses of Budget's appointed manager, will be charged to such fund. As compensation for the management services provided, in addition to all other fees due hereunder, Budget will have the right to charge such fund a reasonable management fee during the period of Budget's management. Licensee agrees to indemnify and hold Budget and any representatives of Budget who may act hereunder harmless from any and all claims arising out of the acts or omissions to act of Budget and/or its representatives in connection with the management of the Rental Business, except those involving gross negligence or willful misconduct of Budget or its representatives.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, a franchisee may incur a fee related to 'Miscellaneous Compensation' under specific circumstances detailed in Paragraph 11.10, concerning the temporary operation of the business. This situation arises if the franchisee defaults on their obligations, leading Budget to determine that the rental business is being operated in a way that could harm the goodwill of the network or jeopardize customer relations and safety. In such cases, Budget has the right to assume management of the rental business.
During the period Budget manages the rental business, all funds generated are kept in a separate account. Expenses related to operating the business, including compensation for Budget's appointed manager, other costs, and travel and living expenses, are charged to this fund. In addition to all other fees due under the agreement, Budget can charge this fund a reasonable management fee as compensation for the management services provided.
The franchisee is also responsible for indemnifying and protecting Budget and its representatives from any claims arising from the acts or omissions of Budget during its management of the rental business, except in cases involving gross negligence or willful misconduct by Budget or its representatives. This means the franchisee bears the financial risk for most operational issues that may occur while Budget is temporarily managing the business to restore its performance and protect the brand's reputation.