After the Budget franchise is terminated or expires, what is the geographic scope of the non-competition covenant?

According to Budget's 2025 Franchise Disclosure Document, franchisees are subject to certain non-competition restrictions even after the franchise agreement ends. Specifically, if the Budget franchise is terminated or expires, the franchisee is prohibited from engaging in any competing business for a period of one year. This restriction applies within the franchisee's licensed territory or within a five-mile radius of that territory.

This post-term non-compete covenant is a standard practice in franchising, designed to protect Budget's market share and confidential information. The geographic scope, limited to the licensed territory and a small buffer zone, is relatively common. However, the one-year duration could impact a former franchisee's ability to quickly re-enter the vehicle rental business or a similar industry.

Prospective Budget franchisees should carefully consider the implications of this non-compete agreement. It is important to understand the exact boundaries of the licensed territory and how the five-mile radius is measured. Franchisees should also evaluate their long-term career goals and whether this restriction could pose a significant obstacle if they decide to leave the Budget system. Consulting with a franchise attorney to fully understand the terms and potential impact of the non-compete is advisable.