Under what circumstances is the Budget Initial License Purchase Fee refundable?

According to Budget's 2025 Franchise Disclosure Document, the Initial License Purchase Fee is generally not refundable under any circumstances. Item 5 explicitly states that these fees are non-refundable. Item 23 reinforces this by stating that the Initial License Purchase Fee is fully earned by Budget upon execution of the agreement and is not refundable, in whole or in part, under any circumstances.

Prospective Budget franchisees should be aware that this non-refundable policy means that once the License Agreement is signed and the fee is paid, the franchisee will not receive a refund of this fee, regardless of whether they successfully open their franchise or not. This is a standard practice in franchising, as the initial fee compensates the franchisor for the initial services and expenses incurred in setting up the franchisee.

However, Item 23 also indicates an exception: 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. This suggests that if Budget fails to fulfill its pre-opening obligations, the franchisee may not be required to pay the initial fee in the first place.

Therefore, while the FDD states that the Initial License Purchase Fee is generally non-refundable, the deferral of payment until Budget fulfills its pre-opening obligations provides a degree of protection for the franchisee. It is crucial for prospective franchisees to understand Budget's pre-opening obligations and to ensure that these obligations are met before paying the Initial License Purchase Fee.