After opening the Avenue in 1876, the city wanted to build a modern transportation system. However, they declined all concepts that were above ground level, because that would have disturbed the wealthy residents of the avenue. For these reasons, they started planning the underground according to the Budapest Electric Railway Co. CEO Mór Balázs’s idea, aided by the technical departments of Siemens and Halske, as well as Adolf Wörner Chief Engineer of Public Railroad Budapest Co. In order to complete this project, the two rival companies (Public Railroad Budapest Co. and Electric Railway Co.) joined forces, and their negotiations were led by the two CEOs, Mór Balázs and Henrik Jellinek. The license for construction was signed for 90 years, on 9 August 1894.

The following day, a new company called Budapesti Földalatti Közúti Villamos Vasút Rt (Budapest Underground Public Electric Railway Inc) was created. One condition was that the constructions had to be finished before the opening of Millennium Exhibition. For construction and installment, they were given a 20-month period.