Is a Budget licensee allowed to communicate with parties other than Budget and Budget's counsel regarding trademark infringements?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
Licensee shall notify Budget immediately in writing of any apparent infringement of or challenge to Licensee's use of any Mark or claim by any person other than Budget of any rights in any Mark or any similar trade name, trademark or service mark of which Licensee becomes aware.
Licensee shall not communicate with any person other than Budget and Budget's counsel in connection with any such infringement, challenge or claim.
Budget will have sole discretion to take such action as it deems appropriate and the right to control exclusively any litigation or administrative proceeding arising out of any such infringement, challenge or claim or otherwise relating to any Mark.
Licensee shall execute any documents, render such assistance and do such acts and things as may, in the opinion of counsel for Budget, be necessary or advisable to protect the interest of Budget in any such litigation or proceeding or to otherwise protect the interest of Budget in the Marks.
Budget will indemnify, defend and hold harmless Licensee from any third party damages suffered by Licensee in any such litigation or proceeding arising from Licensee's proper use of any Mark, and Budget may resolve the matter by obtaining a license for Licensee at Budget's expense, or by requiring that Licensee discontinue using the infringing mark or modify Licensee's use of such mark to avoid infringing the rights of any third party.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, a licensee is explicitly restricted from communicating with any party other than Budget and Budget's legal counsel regarding any potential trademark infringements, challenges, or claims. This restriction ensures that Budget maintains complete control over how its trademarks are managed and protected.
This provision is significant for prospective Budget franchisees because it removes their autonomy in dealing with trademark issues. If a franchisee becomes aware of a potential infringement, they are obligated to report it to Budget but cannot take any independent action or communicate directly with the infringing party. This centralized control allows Budget to ensure consistent and strategic enforcement of its trademark rights.
Budget retains sole discretion in deciding what action to take regarding any infringement, challenge, or claim. The franchisee must also provide any necessary documentation or assistance that Budget's counsel deems advisable to protect Budget's interests in such matters. Budget will defend and indemnify the licensee from third-party damages in litigation arising from the licensee's proper use of the marks. Budget can resolve the matter by securing a license for the franchisee at Budget's expense or by requiring the franchisee to discontinue using the infringing mark or modify its use to avoid infringing the rights of any third party.
This approach is fairly typical in franchising, as franchisors generally want to maintain tight control over their brand and trademarks. By centralizing the management of trademark issues, Budget aims to protect the overall value and reputation of the brand, which benefits all franchisees in the long run.