Does the general release required for Budget renewal include then-existing claims of Licensee against Budget in the ordinary course of business?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
This Agreement will commence upon the Effective Date and, unless sooner terminated as hereinafter provided, remain in force until the Expiration Date identified in the Summary Pages (Section 8). Thereafter, this Agreement may renew, for successive five (5) year terms for a Renewal Fee identified in the Summary Pages (Section 10(r)) in advance of such renewal. Each successive five (5) year term shall commence upon the expiration of the previous term, provided that the following conditions are met at least thirty (30) days prior to the expiration of the applicable term: (a) Licensee is not then in default of any provision of this Agreement or the then-current form of License Agreement of Budget; (b) Licensee is then owned by the same beneficial owners as own Licensee currently or by their Permitted Transferees (as defined in Paragraph 12.2(b)); (c) Licensee signs the then-current form of License Agreement, appropriately amended to reflect the material economic terms contained within the then-current form of License Agreement, where applicable; (d) Licensee upgrades the Rental Business to conform to any then-current System Standards and specifications, and (e) Licensee and its owners sign a general release, in a form satisfactory to Budget, of any and all claims against Budget and its Related Entities and their respective shareholders, officers, directors, employees, agents, representatives, successors and assigns; provided, however, such general release will exclude thenexisting litigation between Licensee and Budget or the Related Entities and the 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. If such conditions are not met within the prescribed time period referred to above prior to the expiration of the current term, such term will expire upon the Expiration Date previously established in accordance with this Paragraph 11.1. Budget agrees to provide Licensee with notice of the approaching expiration of any term and the documentation referenced above sufficiently in advance of such expiration date for Licensee to comply with the renewal provisions of this Paragraph 11.1.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the general release required for franchise renewal does not include then-existing claims of the Licensee against Budget in the ordinary course of business. Specifically, the FDD states that the general release franchisees must sign as a condition of renewal excludes then-existing litigation and claims against Budget or related entities that arise in the ordinary course of business under the License Agreement or any other agreement between the parties. These excluded claims and litigation must be identified in the release.
This provision protects Budget franchisees by ensuring they do not have to waive legitimate, ongoing business claims against Budget to renew their franchise agreement. It allows franchisees to continue pursuing valid claims while still being able to renew their franchise, provided these claims are properly identified in the release document. This is a significant benefit for franchisees as it prevents them from being forced to choose between their legal rights and the continuation of their business.
However, it is important for prospective Budget franchisees to understand the scope and limitations of this exclusion. The exclusion only applies to litigation and claims existing at the time of renewal and arising in the ordinary course of business. Any new claims arising after the renewal, or claims not considered to be in the ordinary course of business, may be subject to the general release. Franchisees should consult with legal counsel to ensure they fully understand the implications of the general release and the identification of excluded claims.