For a Budget franchise, to what extent are the provisions of the Rider effective?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
NFIDENTIALITY AGREEMENT REQUIRED BY THE STATE OF MINNESOTA
| ("PROSPEC | CTIVE LICENSEE"). | |---------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | certain "Con | Background. BUDGET and PROSPECTIVE LICENSEE are parties to that fidentiality License Agreement" dated | | executed cor | | | of the Confid | | | that PROSPE | | | be located in | | | License Agre | | | will be effe | | | 2. | Injunctive Relief . The second sentence of Paragraph 5 of the Confidentiality is deleted in its entirety and the following is substituted in its place: | | Agreement | DGET will be entitled to seek injunctive relief without bond to enjoin any all or threatened conduct in violation of this Agreement." | | 3. | Law and Jurisdiction . The following language is added to the end of of the Confidentiality Agreement: | | Paragraph 7 | | | shall | rsuant to Minn. Stat. '80C.21 and Minn. Rule Part 2860.4400J, this section I not in any way abrogate or reduce PROSPECTIVE LICENSEE's rights as rided in Minnesota Statutes, 1984, Chapter 80C, including any right to submit ters to the jurisdiction of the courts of Minnesota." | | prov | | IN WITNESS WHEREOF, the parties hereto have executed and delivered this Rider on the day and year first above written.
PROSPECTIVE LICENSEE
| By: Its: | ||
|---|---|---|
| Accepted and Acknowledged: | ||
| BUDGET RENT A CAR SYSTEM, INC. | ||
| By: | ||
| Its: |
RIDER TO BUDGET RENT A CAR SYSTEM LICENSE AGREEMENT REQUIRED BY THE STATE OF MINNESOTA
| This Rider is made and entered into this day of , |
|---|
| , by and between Budget Rent A Car System, Inc., a Delaware corporation ("Budget"), |
| 20 |
| and |
| d/b/a Budget Rent A Car of |
| ("Licensee"). |
| 1. |
| Background. Budget |
| and Licensee |
| are |
| parties |
| to |
| that |
| certain "License |
| Agreement" dated |
| , 20 |
| that has been executed concurrently |
| with the execution of this Rider. This Rider is annexed to and forms part of the License |
| Agreement. This Rider is being executed because (a) the Budget Franchise that Licensee will |
| operate under the License Agreement is located in the State of Minnesota; and/or (b) any of the |
| offering or sales activity with respect to the License Agreement occurred in the State of |
| Minnesota. Each provision of this Rider will be effective only to the extent, with respect to such |
| provision, that the jurisdictional requirements of the Minnesota Franchise Act and its regulations |
| are met independently without reference to this Rider. |
- Notification of Infringement/Claim. The third sentence of Paragraph 2.2 of the License Agreement is deleted in its entirety and replaced by the following:
"Licensee agrees that Budget shall have sole discretion to take such action as it deems appropriate and the right to control exclusively any litigation or administrative proceeding arising out of any such infringement, challenge or claim or otherwise relating to any Budget Trademark, in accordance with Minn. Stat. Sec. 80C.12, Subd. 1(g)."
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- Initial License Purchase Fee. Notwithstanding anything contrary in Section 7.1, the payment of all initial fees is deferred until Budget has satisfied its pre-opening obligations to Franchisees under the License Agreement and Franchisee's Licensed Business opens to the public.
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- Termination Fee. The following language is added to the end of Paragraph 11.2 of the License Agreement:
"Budget and Licensee acknowledge that the payment of the Termination Fee might not be enforceable under the Minnesota Franchises Law; however, Budget and Licensee agree to enforce the terms of this Paragraph 11.2 to the maximum extent that the law allows."
- Termination By Budget Without Prior Notice. The following language is added to the end of Paragraph 11.4 of the Prime License Agreement:
"Minnesota law provides a licensee with certain termination and non-renewal rights. With respect to franchises governed by Minnesota law, Budget will comply with Minn. Stat. Sec. 80C.14 Subds. 3, 4 and 5 which require, except in
certain specified cases, that a licensee be given ninety (90) days' notice of termination (with sixty (60) days to cure) and one hundred eighty (180) days' notice for non-renewal of the License Agreement."
- Non-Competition. The third and fourth sentences of Paragraph 11.9 of the License Agreement are deleted in their entirety and the following sentences are substituted in their place:
"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 Paragraph 1.6 or 2.4 hereof and accordingly agrees that Budget may seek entry, without prior notice, to the extent that applicable notice requirements may be waived, of temporary and permanent injunctions against Licensee's breach of such provisions. Licensee further agrees that Budget may seek an amount equal to the aggregate of Budget's costs of obtaining any such temporary and permanent injunctive relief, including all costs of investigation and proof of facts, court costs and attorney's fees."
- New Jersey Law Governs. The following language is added to the end of Paragraph 14.7 of the License Agreement:
"Pursuant to Minn. Stat. Section 80C.21 and Minn.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the effectiveness of the Rider provisions depends on the franchisee's location and whether the jurisdictional requirements of the relevant state's franchise laws are met. Specifically, Riders are included for franchisees in California, North Dakota, Minnesota, New York, Illinois, and Maryland, addressing specific legal considerations within those states.
For instance, the Rider for Minnesota states that its provisions are effective only to the extent that the jurisdictional requirements of the Minnesota Franchise Act and its regulations are met independently, without relying on the Rider itself. This means that the Rider's clauses regarding termination notices, litigation forums, and waivers are only applicable if they align with Minnesota law. Similarly, the Rider for New York specifies that its provisions are effective only if the jurisdictional requirements of New York franchise disclosure law are independently satisfied.
In Illinois, the Rider stipulates that the laws of Illinois govern the agreement, overriding any conflicting rules. Additionally, the Maryland Rider modifies specific sections of Item 17 in the Budget License Agreement chart, ensuring compliance with Maryland franchise law regarding releases for renewal, assignment, and transfer, as well as choice of forum and law. These state-specific Riders aim to ensure that the Budget franchise agreement complies with local laws, but their effectiveness is contingent on meeting each state's jurisdictional requirements independent of the Rider itself.
For prospective Budget franchisees, this means carefully reviewing the Rider applicable to their state and understanding how it modifies the standard franchise agreement. It is essential to consult with a legal professional to ensure full compliance with local franchise laws and to understand the extent to which the Rider's provisions are enforceable in their specific jurisdiction. The interplay between the franchise agreement, the Rider, and state law can be complex, making legal guidance crucial.