Does the general release of claims required for a transfer of a Budget franchise include then-existing litigation between the Licensee and Budget?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
Licensee agrees that this Agreement is personal to Licensee and Licensee hereby acknowledges the personal confidence Budget has in Licensee and/or the beneficial owners of Licensee as identified in Paragraph 12.5 and the Summary Pages (Section 6).
Neither this Agreement, the beneficial ownership of Licensee or the Rental Business (or any material assets relating to the Rental Business), or any licenses, concession agreements and/or permits which are required by, or related to, the Rental Business, may be voluntarily, involuntarily, directly or indirectly sold, assigned or otherwise transferred by Licensee (including by will, declaration of or transfer in trust or the laws of intestate succession or by operation of law through a divorce or other legal proceeding), without the prior written consent of Budget, which will not be unreasonably withheld in accordance with this Agreement and the transfer requirements prescribed by Budget from time to time, including payment of a transfer fee (see the "Transfer Requirements" contained in Exhibit F) and Licensee's execution of a general release of claims in a form satisfactory to Budget, except that such general release will exclude then- existing litigation between Licensee and Budget or the Related Entities and then-existing claims of Licensee against Budget or the Related Entities in the ordinary course of business under this Agreement or any other agreement between such parties, which litigation and claims will be identified in such release.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, when transferring a franchise, the general release of claims that a licensee must execute does not include then-existing litigation between the licensee and Budget or related entities. It also excludes then-existing claims of the licensee against Budget or related entities in the ordinary course of business under the License Agreement or any other agreement between such parties. Any such litigation and claims will be identified in the release.
This means that if a Budget franchisee is involved in a lawsuit with Budget at the time of the franchise transfer, the franchisee is not required to release their rights to continue with that lawsuit as a condition of the transfer. Similarly, the franchisee does not have to release any existing claims against Budget that have arisen in the normal course of business under their agreements. This protects the franchisee's right to pursue ongoing legal matters, even while transferring the franchise to a new owner.
This provision is favorable for franchisees because it prevents Budget from using the transfer process to force the resolution of outstanding disputes. Franchisees can transfer their business without giving up their legal rights, which is a significant protection. Prospective franchisees should carefully review the specific terms of the release and consult with an attorney to fully understand their rights and obligations during a transfer.