How does Budget determine the boundaries of a franchisee's territory?

Budget grants licenses to operate a Budget Franchise to persons with the ability to operate and promote a Budget Franchise in a particular geographic territory. Budget will assign you a territory in which to operate under the Budget License Agreement and in which you choose your business locations, subject to Budget's approval (see Item 11) Because the size of the licensed territory depends on factors like population, the presence or absence of an airport, and your operational abilities and experience, it is not possible to specify the minimum area granted to a Budget Franchise. The territory is usually described by political boundaries (for example, part of a city or county), but in certain areas might be a circle with your location at the center. Budget may use accepted industry parameters, census tracts, population densities, zip code boundaries, buying patterns, traffic counts, and projected commercial and residential growth to determine the territory's boundaries. However, a territory will not usually include a population of less than 25,000 people. During the term of your Budget License Agreement and subject to your compliance with all of your other obligations under the Budget License Agreement, Budget will not operate on its own behalf, or grant a license to another party to operate, a Budget Franchise within your territory.

You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.

Nothing in the Budget License Agreement prohibits Budget or its parent company, subsidiaries, or affiliates from: (a) engaging in the activities referred to above; (b) operating or granting others the right to operate, Budget Rent A Car businesses in the licensed territory that offer to rental vehicle other than the Vehicles including, but not limited to, renting or leasing motor vehicles that are designed, used or maintained for the transportation of property, cargo or goods (collectively defined as "Trucks"); or (c) selling their assets, engaging in a public offering or private placement of ownership interests, merging with or acquiring other corporations or entities, or being acquired by another corporation or entity (including a corporation or entity that owns or operates systems or chains that may be competitive with or similar to the Network).

Budget reserves all rights not expressly granted to you under your Budget License Agreement, including the rights of Budget and its affiliates to: (1) operate, and grant others the right to operate Budget Franchises outside your licensed territory and, under certain circumstances (for National Accounts or if you fail to comply with the Budget License Agreement, as described below), inside the licensed territory, on any terms and conditions Budget deems appropriate; (2) hire and/or appoint sales persons and general sales agents and negotiate and enter into local, regional, national, and international sales and marketing agreements with persons or entities located within your licensed territory; (3) use Budget's Proprietary Marks for any purpose within your licensed territory, other than for the operation of a Budget Rent A Car business location offering for rental the vehicles offered through your Budget Franchise ("Vehicles"), subject to Budget's rights under the Budget License Agreement; and (4) operate, and grant others the right to operate, businesses (including businesses that offer for rent or sale Vehicles and other motorized and non-motorized equipment and parking business) outside and within the licensed territory under trademarks different than Budget's Proprietary Marks.

Source: Item 12 — TERRITORY (FDD pages 61–63)