What is the condition regarding existing litigation and claims when a Budget Licensee executes a general release of claims?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
Licensee agrees that this Agreement is personal to Licensee and Licensee hereby acknowledges the personal confidence Budget has in Licensee and/or the beneficial owners of Licensee as identified in Paragraph 12.5 and the Summary Pages (Section 6).
Neither this Agreement, the beneficial ownership of Licensee or the Rental Business (or any material assets relating to the Rental Business), or any licenses, concession agreements and/or permits which are required by, or related to, the Rental Business, may be voluntarily, involuntarily, directly or indirectly sold, assigned or otherwise transferred by Licensee (including by will, declaration of or transfer in trust or the laws of intestate succession or by operation of law through a divorce or other legal proceeding), without the prior written consent of Budget, which will not be unreasonably withheld in accordance with this Agreement and the transfer requirements prescribed by Budget from time to time, including payment of a transfer fee (see the "Transfer Requirements" contained in Exhibit F) and Licensee's execution of a general release of claims in a form satisfactory to Budget, except that such general release will exclude then- existing litigation between Licensee and Budget or the Related Entities and 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.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, when a Budget Licensee is required to execute a general release of claims, such release will specifically exclude any existing litigation between the Licensee and Budget or its related entities. It also excludes any existing claims the Licensee has against Budget or its related entities that have arisen in the ordinary course of business under the License Agreement or any other agreement between the parties. These existing litigations and claims must be explicitly identified in the release.
This provision protects the Licensee from having to waive their rights to pursue ongoing legal actions or claims against Budget as a condition of the transfer or renewal of their franchise agreement. This ensures that franchisees are not forced to abandon legitimate grievances in order to maintain their business relationship with Budget.
For a prospective Budget franchisee, this means that if there are any ongoing disputes or claims against Budget at the time of a transfer or renewal, they can continue to pursue those matters without jeopardizing their franchise agreement. It is important for franchisees to carefully document and identify any such existing litigation or claims in the general release to ensure they are properly excluded from the waiver. This clause provides a degree of protection for franchisees who may have legitimate grievances against the franchisor.