After the Budget franchise is terminated or expires, for how long does the non-competition covenant apply?

According to Budget's 2025 Franchise Disclosure Document, franchisees are subject to a non-competition covenant both during the term of the franchise and after it is terminated or expires. Specifically, after the Budget franchise is terminated or expires, the franchisee is restricted from engaging in any competing business for one year. This restriction applies within the licensed territory or within five miles of the licensed territory.

This post-term non-compete agreement is designed to protect Budget's market share and proprietary information. By preventing former franchisees from immediately opening a competing business nearby, Budget aims to maintain its competitive advantage and customer base. The terms are outlined in Sections 11.9, 12.6, and the Nondisclosure and Noncompetition Agreement of the Budget License Agreement.

For a prospective Budget franchisee, this means that upon termination or expiration of the franchise agreement, they will be unable to operate a competing vehicle rental business within their licensed territory or within a five-mile radius for a period of one year. This could significantly impact their ability to earn income in the same industry immediately following the end of their franchise agreement. It is important to carefully consider these restrictions and plan accordingly, potentially exploring opportunities outside of the vehicle rental industry or in locations beyond the restricted area during that one-year period.

It is also worth noting that the non-competition covenant is tied to the Nondisclosure and Noncompetition Agreement, suggesting that it also aims to protect Budget's confidential information and trade secrets. Franchisees should ensure they fully understand the scope of these restrictions and how they might affect their future business endeavors.