If a dispute arises with Budget, which state's courts have jurisdiction, subject to state law?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section of the Budget License Agreement | Summary |
|---|---|---|
| q. Non-competition during the term of the franchise | 1.6 and Nondisclosure and Noncompetition Agreement | No involvement in other vehicle rental business or system in the United States. |
| r. Non-competition covenants after the franchise is terminated or expires | 11.9, 12.6, and Nondisclosure and Noncompetition Agreement | No competing business for one year in licensed territory or within five miles of licensed territory. |
| s. Modification of the agreement | 14.2(c) | Must be reduced to writing and signed by you and Budget. However, the Manual and Standards are subject to change. |
| t. Integration/merger clause | 14.2(a) | Only terms of license agreement, its exhibits, its schedules, the Standards and Transfer Requirements are enforceable. Any representations or promises outside of the disclosure document and license agreement may not be enforceable. Notwithstanding the foregoing, nothing in this or any related agreement is intended to disclaim the express representations made in the Franchise Disclosure Document, its exhibits and amendments. |
| u. Dispute resolution by | None | |
| arbitration or mediation | ||
| v. Choice of forum | 14.9 | Subject to state law, you agree to the jurisdiction of New Jersey courts. |
| w. Choice of law | 14.8 | Subject to state law, New Jersey law applies. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 66–70)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, franchisees agree to the jurisdiction of New Jersey courts for dispute resolution, subject to state law. This means that if a legal dispute arises between a franchisee and Budget, the lawsuit would likely need to be filed and litigated in New Jersey, regardless of where the franchisee's business is located.
The franchisee should be aware of the implications of this clause. They may incur significant travel and legal expenses if they need to pursue a claim against Budget or defend themselves in a lawsuit initiated by Budget. Selecting New Jersey as the forum could also mean that New Jersey law will govern the interpretation and enforcement of the franchise agreement.
Forum selection clauses are common in franchise agreements, as they provide the franchisor with a consistent legal environment and reduce the risk of facing lawsuits in multiple jurisdictions. However, franchisees should carefully consider the potential costs and inconveniences associated with litigating disputes in a distant forum. It is advisable to consult with an attorney to fully understand the implications of this clause before signing the franchise agreement.