Under what conditions will Budget licensees receive a credit balance related to Reservation Fees, Third Party Automated Reservation, Network Access and Internet/Tour Direct Fees?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
- Year End Reconciliation. At the end of each calendar year, ABCR will prepare a profit and loss statement for the Reservation System, reconcile the applicable fees and expenses, and adjust such fees for the then current year including any retroactive adjustment to the beginning of the then current calendar year as follows:
Reservation Fee/Third Party Automated Reservation/Network Access/ Internet/Tour Direct Fees.
- (a) Credit Balance. If and to the extent the Reservation Fee, Third Party Automated Reservation, Network Access and Internet/Tour Direct Fees charged to all Budget licensees during the year exceed the corresponding expenses incurred during that year, the excess fees will be credited to the following year to offset future Reservation Fees and to reduce any increase in the Reservation Fee for such following year.
- (b) Deficit Balance. If and to the extent the Reservation Fee, Third Party Automated Reservation, Network Access and Internet/Tour Direct expenses incurred during the year exceed the total Reservation Fee, Third Party Automated Reservation, Network Access and Internet/Tour Direct Fees charged to all Budget licensees during the year, ABCR may recover the deficit amount by increasing the Reservation Fee upon 30 days written notice to the Licensee, subject to the limitations of Section II.1.(a) above.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, Budget licensees may receive a credit balance related to certain fees if the total fees collected exceed the expenses incurred. Specifically, at the end of each calendar year, Avis Budget Car Rental (ABCR) will prepare a profit and loss statement for the Reservation System. This statement reconciles the Reservation Fee, Third Party Automated Reservation, Network Access, and Internet/Tour Direct Fees with the corresponding expenses.
If the total amount of these fees charged to all Budget licensees during the year is greater than the expenses incurred to operate the reservation system, the excess amount will be credited to the following year. This credit is applied to offset future Reservation Fees and potentially reduce any increases to the Reservation Fee for the subsequent year. This mechanism ensures that licensees may benefit financially if the reservation system is efficiently managed and generates surplus revenue.
Conversely, if the expenses exceed the fees collected, ABCR has the right to recover the deficit by increasing the Reservation Fee. However, ABCR must provide the licensee with 30 days written notice before implementing such an increase, and any increase is subject to certain limitations outlined elsewhere in the License Agreement. This reconciliation process is an important aspect of the Budget franchise system, as it directly impacts the fees paid by licensees and ensures some level of financial transparency and accountability in the operation of the reservation system.