After the Budget agreement terminates, for how long is the Licensee prohibited from participating in a vehicle rental business within the specified territory?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
- 11.9 Noncompetition.
In addition to the obligations in Paragraph 1.5, Licensee will not, for a period of twelve (12) months after the termination or expiration of this Agreement for any reason whatsoever, either directly or indirectly, participate in any way or engage in as an owner, partner, director, officer, employee, consultant or agent, or in any other capacity, in any other vehicle rental business or system, within the Territory or within five (5) miles of the Territory.
Licensee acknowledges that its failure to adhere to this provision will constitute unfair competition to Budget.
Licensee further acknowledges the impossibility of accurately determining the tangible and intangible damages which Budget will suffer if Licensee fails or refuses to adhere to this provision or the provisions of Paragraphs 1.5 or 2.4 hereof and accordingly agrees to entry without prior notice, to the extent that applicable notice requirements may be waived, of temporary
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, a franchisee is restricted from participating in a vehicle rental business for a period of twelve months after the termination or expiration of the franchise agreement. This restriction applies regardless of the reason for termination or expiration.
Specifically, the franchisee is prohibited from engaging in any capacity, whether as an owner, partner, director, officer, employee, consultant, or agent, in any other vehicle rental business or system. This non-compete clause is in effect within the defined territory and extends to a five-mile radius beyond the territory's boundaries.
Budget emphasizes that any violation of this non-competition provision would be considered unfair competition against Budget. The agreement also acknowledges the difficulty in determining the exact damages Budget would incur if a franchisee breaches this clause, reinforcing the importance of adhering to the non-compete terms. This restriction is in addition to the obligations outlined in Paragraph 1.5 of the franchise agreement, which likely covers non-competition during the term of the agreement.