Does Budget franchise require primary insurance liability for third party claims?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
Licensee will maintain such insurance, in such minimum amounts, and with such carriers as approved by Budget in its sole discretion or, as are prescribed in the Standards and in this Paragraph 9.4.
Licensee will annually provide a current certificate of insurance to Budget naming Budget and its affiliates as additional insureds as prescribed by Budget in the Standards, and the insurer must waive any subrogation rights it may have against Budget.
Budget may periodically increase the amounts of insurance carried by Licensee and require different or additional kinds of insurance to reflect inflation, changes in standards of liability, higher damages, Licensees specific claims history or other relevant circumstances.
Budget reserves the right to receive an administrative fee or commission for its endorsement of certain insurance carriers and/or programs for the sale of supplemental liability and related insurance to rental customers.
13.1 Indemnification of Budget by Licensee. Nothing in this Agreement authorizes Licensee to make any contract, agreement, warranty, or representation on Budget's behalf, or to incur any debt or other obligation in Budget's name; and, that Budget will in no event assume liability for, or be deemed liable as a result of, any such action, or by reason of any act or omission of Licensee in its conduct of the Rental Business or for any claim or judgment arising therefrom against anyone. Licensee will indemnify and hold harmless Budget and the Related Entities and their respective officers, directors, employees, affiliates, agents, successors and assigns (collectively, "Budget Indemnified Parties") against any and all liabilities, claims, demands, causes of action, damages, costs, expenses and amounts of any type whatsoever, including environmental claims, whether expended in settlement, in attorneys' fees, or however expended or disbursed, which arise directly or indirectly from, as a result of, or in connection with Licensee's
operation of the Rental Business, or in Licensee's dealings with third parties concerning said Rental Business, this Agreement, the System, or the Marks. In addition, Licensee will, at Budget's request, defend, at Licensee's expense, Budget and the other Budget Indemnified Parties against such claims, demands and causes of action; provided, however, that Licensee will relinquish such defense to Budget immediately upon Budget's request, although Licensee will remain obligated to pay Budget's and the other Budget Indemnified Parties' defense costs (but Licensee shall not be liable for the expenses of more than one law firm representing such Budget Indemnified Parties unless there is a conflict of interest.) and any settlements entered into by Budget and the other Budget Indemnified Parties at their discretion. In no event may Licensee enter into any settlement of any such claim on behalf of an Budget Indemnified Party without Budget's prior written approval.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, Budget requires licensees to maintain insurance. The specific types and minimum amounts of insurance, as well as the carriers, must be approved by Budget or prescribed in the Standards outlined in Paragraph 9.4. Licensees must provide Budget with a current certificate of insurance annually, naming Budget and its affiliates as additional insureds, and the insurer must waive any subrogation rights against Budget. Budget retains the right to increase insurance amounts or require different or additional kinds of insurance based on factors like inflation, liability standards, claims history, or other relevant circumstances.
Budget also reserves the right to receive an administrative fee or commission for endorsing certain insurance carriers or programs for the sale of supplemental liability and related insurance to rental customers. This suggests that Budget may have preferred insurance providers or programs that franchisees are encouraged to use, potentially generating additional revenue for Budget.
Furthermore, Budget requires licensees to indemnify and hold harmless Budget and its related entities against any liabilities, claims, demands, damages, costs, and expenses arising from the licensee's operation of the rental business or dealings with third parties. This indemnification extends to environmental claims and includes expenses such as attorneys' fees. Licensees are also required to defend Budget against such claims at Budget's request, although Budget can take over the defense at any time, with the licensee still responsible for defense costs and settlements. Licensees cannot settle any claim on behalf of Budget without prior written approval.