How is the book value of a vehicle calculated for Budget, according to the FDD?

According to Budget's 2025 Franchise Disclosure Document, the book value of a vehicle is calculated based on the Owning City's actual cost, which includes any rebates and taxes, less a depreciation of 2.083% per month from the date of purchase. This calculation is used in situations where a vehicle is damaged beyond repair, converted due to improper renter qualification, or stolen. In these instances, the Receiving City/Custodial City or Renting City may be required to purchase the vehicle from the Owning City at its book value.

This method of calculating book value has significant implications for Budget franchisees. It establishes a clear and consistent standard for determining the value of vehicles in various scenarios, such as damage or theft. The monthly depreciation rate of 2.083% allows for a predictable reduction in value over time, which can aid in financial planning and risk management. Franchisees need to understand this calculation to accurately assess their financial responsibilities and potential liabilities related to vehicle conditions and security.

Furthermore, the FDD stipulates that an operator's liability for a non-owned vehicle is limited to the Owning City's book value, net of any recovery monies from sources like salvage, LDW (Loss Damage Waiver) collection, insurance, or subrogation. This limitation provides a degree of financial protection for franchisees, as their liability is capped at the depreciated value of the vehicle, minus any recovered funds. Franchisees should ensure they fully understand the conditions under which this liability limitation applies and the procedures for reporting and processing claims.

Overall, the book value calculation and related stipulations in the Budget FDD are crucial for franchisees to understand their financial obligations and manage risks associated with vehicle operations. Franchisees should carefully review these provisions and seek clarification from Budget regarding any uncertainties to ensure they are well-prepared to handle various scenarios involving vehicle damage, theft, or conversion.