Under what grounds can a franchisee terminate the Budget agreement?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
release will exclude thenexisting litigation between Licensee and Budget or the Related Entities and the then-existing claims of Licensee against Budget or the Related Entities in the ordinary course of business under this Agreement or any other agreement between such parties, which litigation and claims will be
identified in such release. If such conditions are not met within the prescribed time period referred to above prior to the expiration of the current term, such term will expire upon the Expiration Date previously established in accordance with this Paragraph 11.1. Budget agrees to provide Licensee with notice of the approaching expiration of any term and the documentation referenced above sufficiently in advance of such expiration date for Licensee to comply with the renewal provisions of this Paragraph 11.1.
- 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).
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, a franchisee can terminate the License Agreement with or without cause by providing Budget with a written notice of termination 180 days in advance. However, during this 180-day period, specific conditions apply that could trigger a Termination Fee.
If the Budget franchisee ceases to operate the rental business or if their gross revenue falls below the average monthly gross revenue of the preceding year (or the term of the agreement if less than a year) during that 180-day period, the franchisee will be required to pay a Termination Fee instead of the standard license fees for the remainder of the period. This Termination Fee is calculated as six times the average monthly license fees from the previous year (or the term of the agreement if less than a year), multiplied by a fraction representing the remaining days in the 180-day period after the event occurred.
It is important to note that according to the FDD, Budget and the franchisee acknowledge that the enforceability of the Termination Fee might be limited under Minnesota Franchises Law, but both parties agree to enforce the terms of this provision to the maximum extent allowed by law. Additionally, the franchisee may terminate the agreement on any grounds available by law.