Does Budget have the ability to negotiate provisions in the Budget License Agreements it offers to Budget Licensees?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section of the Budget License Agreement | Summary |
|---|---|---|
| q. Non-competition during the term of the franchise | 1.6 and Nondisclosure and Noncompetition Agreement | No involvement in other vehicle rental business or system in the United States. |
| r. Non-competition covenants after the franchise is terminated or expires | 11.9, 12.6, and Nondisclosure and Noncompetition Agreement | No competing business for one year in licensed territory or within five miles of licensed territory. |
| s. Modification of the agreement | 14.2(c) | Must be reduced to writing and signed by you and Budget. However, the Manual and Standards are subject to change. |
| t. Integration/merger clause | 14.2(a) | Only terms of license agreement, its exhibits, its schedules, the Standards and Transfer Requirements are enforceable. Any representations or promises outside of the disclosure document and license agreement may not be enforceable. Notwithstanding the foregoing, nothing in this or any related agreement is intended to disclaim the express representations made in the Franchise Disclosure Document, its exhibits and amendments. |
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD page 65)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, modifications to the Budget License Agreement must be made in writing and signed by both the franchisee and Budget. However, Budget's Manual and Standards are subject to change. This indicates that while some aspects of the agreement can be negotiated, others, particularly those outlined in the Manual and Standards, are subject to change at Budget's discretion.
This condition is fairly typical in franchising, where franchisors need to maintain uniformity across all franchise locations to protect the brand. The requirement for written and signed modifications provides a degree of protection for the franchisee, ensuring that any changes are formally agreed upon. However, the unilateral right of Budget to change the Manual and Standards means that franchisees must stay informed of these changes and adapt their business practices accordingly.
Furthermore, the integration/merger clause specifies that only the terms of the license agreement, its exhibits, schedules, the Standards, and Transfer Requirements are enforceable. Any representations or promises made outside of the disclosure document and license agreement may not be enforceable. However, the clause clarifies that this does not disclaim express representations made in the Franchise Disclosure Document, its exhibits, and amendments. This clause emphasizes the importance of relying on the written agreements and disclosures provided by Budget, rather than any verbal promises or representations made during the negotiation process. Prospective franchisees should carefully review all documents and seek clarification on any points of concern before signing the agreement.