Considering the litigation disclosed in Item 3, what impact might this have on a Budget franchisee's ability to comply with the ongoing obligations outlined in Item 9?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
There is extensive litigation involving Avis/Budget disclosed in Item 3 of the disclosure document. Make certain to review Item 3 in the disclosure document, along with the document attached as Exhibit B, Laws & Regulations Concerning the Car Rental Industry and the Announcement of the Department of Justice – Settlement Agreement.
| Type of Insurance | Minimum Amount |
|---|---|
| Fleet Insurance | $100,000 / $300,000 bodily injury and$50,000 per occurrence for property damage, or such other amounts as are required by local law. |
| Lessor’s / Owner’s Excess Liability Insurance | $1,000,000 combined single limit per occurrence |
| General Liability Insurance | $1,000,000 combined single limits |
| OBLIGATION | SECTION IN AGREEMENT |
| a. Site selection and | 8.1 to 8.3 of the Budget License Agreement |
| acquisition/lease | |
| b. Pre-opening purchases/leases | 8.1, 8.2, 9.11, 9.12, 10.2, 10.4 and 10.5 of the Budget License Agreement IV, V and VI of the Rental Sys |
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, Item 23 refers to Item 3, advising prospective franchisees in Illinois to carefully review the extensive litigation involving Avis/Budget disclosed in Item 3, along with Exhibit B, which contains laws and regulations concerning the car rental industry, and the Department of Justice settlement agreement. This suggests that the litigation described in Item 3 could have a significant impact on a Budget franchisee, particularly in Illinois.
While Item 23 highlights the importance of reviewing Item 3 and its related exhibits, it does not explicitly detail how the litigation might affect a franchisee's ability to meet the obligations listed in Item 9. Item 9 outlines the franchisee's obligations under the Budget License Agreement, such as site selection, pre-opening purchases/leases, and insurance requirements, including fleet insurance with minimum coverage of $100,000 / $300,000 for bodily injury and $50,000 per occurrence for property damage, as well as Lessor’s / Owner’s Excess Liability Insurance and General Liability Insurance, each with $1,000,000 combined single limits per occurrence.
Given the lack of specific information, it is crucial for a potential Budget franchisee to thoroughly review Item 3 and Exhibit B to understand the nature of the litigation and its potential impact on their business. This review should help assess whether the litigation could affect their ability to secure financing, maintain insurance coverage, or otherwise comply with the obligations outlined in Item 9. A prospective franchisee should seek clarification from Budget regarding any potential impact of the litigation on their obligations and operational requirements.