Under what conditions will a Budget Licensee pay a Termination Fee?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
- 11.2 Termination By Licensee.
Budget agrees that Licensee may terminate this Agreement, with or without cause, effective one hundred and eighty (180) days after written notice of its election to so terminate is delivered to Budget.
However, if, in any calendar month during that one hundred eighty (180) day period: (a) Licensee ceases to operate the Rental Business; or (b) Licensee's Gross Revenue is less than the average monthly Gross Revenue of the Rental Business during the preceding one (1) year period (or during the term of this 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.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, a licensee may be required to pay a termination fee if they choose to terminate the agreement early. The licensee must provide Budget with a written notice of termination 180 days in advance.
However, according to the FDD, if during that 180-day period, the Budget licensee ceases to operate the rental business, or if their gross revenue is less than the average monthly gross revenue of the rental business during the preceding year (or the term of the agreement, if less than a year), then the licensee will be required to pay a termination fee instead of the standard license fees for the remainder of the 180-day period.
The termination fee is calculated as six times the average license fees payable by the licensee for the preceding year (or the term of the agreement, if less than a year), multiplied by a fraction. The numerator of this fraction is the number of days remaining in the 180-day period after the event (ceasing operations), and the denominator is 180. This obligation to pay a termination fee does not affect any other rights or remedies Budget may have under the agreement.