Is a Budget licensee allowed to disclose confidential information about the Budget system to their employees?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
g is upheld on appeal.
By the Commission,
Donald S. Clark Secretary
ISSUED: January 2, 2008
EXHIBIT D CONFIDENTIALITY AGREEMENT
CONFIDENTIALITY AGREEMENT
| This Confidentiality Agreement is made and entered into as of | , 20 between |
|---|---|
| BUDGET RENT A CAR SYSTEM, INC., a Delaware corporation ("BUDGET") and | , |
| a ("PROSPECTIVE LICENSEE"). |
WHEREAS, PROSPECTIVE LICENSEE desires to evaluate the purchase of a license from BUDGET on the terms and conditions of BUDGET'S License Agreement; and
WHEREAS, in connection with this evaluation, PROSPECTIVE LICENSEE desires to review Budget's Standard Operating Manual, which may consist of several component parts ("Operating Manual"), which Operating Manual contains, and is being maintained as, confidential information and trade secrets of BUDGET; and
WHEREAS, BUDGET will permit inspection of its Operating Manual prior to the execution of a License Agreement only on the terms and conditions of this Confidentiality Agreement;
NOW, THEREFORE, in consideration of being given access to the Operating Manuals, PROSPECTIVE LICENSEE hereby agrees as follows:
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- All information contained in the Operating Manual (the "Confidential Information") shall be used by PROSPECTIVE LICENSEE solely for the purpose of evaluating whether or not to enter into a License Agreement with BUDGET, and for no other purpose.
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- PROSPECTIVE LICENSEE shall not disclose the Confidential Information to any person or entity other than Permitted Parties, as defined below.
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- Confidential Information does not include any item of information, which is either: (a) known to PROSPECTIVE LICENSEE prior to its receipt of such information from BUDGET; (b) known to the public prior to PROSPECTIVE LICENSEE'S receipt of such information from BUDGET; (c) after such receipt, becomes available to the public generally other than by contravention of this Agreement, any Permitted Party's Confidentiality Agreement, or any other duty to or agreement with BUDGET; or (d) is obtained by PROSPECTIVE LICENSEE from a source with the independent right to disclose it.
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- Upon completion of the evaluation process, PROSPECTIVE LICENSEE shall return to BUDGET all copies of the Operating Manual and all other tangible embodiments containing any Confidential Information, including any notes or analyses made by PROSPECTIVE LICENSEE or any Permitted Party.
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- A breach of any provision of this Agreement will cause BUDGET irreparable injury. BUDGET will be entitled to injunctive relief without bond to enjoin any actual or threatened conduct in violation of this Agreement. If BUDGET is successful in obtaining enforcement of this Agreement, BUDGET shall also be entitled to recover from PROSPECTIVE LICENSEE any and all attorney's fees, court costs and other expenses incurred by BUDGET in connection with such enforcement.
6. "Permitted Parties" shall mean:
a. Officers, directors and employees of PROSPECTIVE LICENSEE who have previously executed a Confidentiality Agreement in favor of BUDGET; and
- b. Attorneys, agents, consultants, advisors or other independent contractors of PROSPECTIVE LICENSEE, but only if such party:
- (i) Has previously executed a Confidentiality Agreement in favor of BUDGET; and
- (ii) Has previously required all individuals related to it who will have access to the Confidentiality Information to execute a Confidentiality Agreement in favor of BUDGET.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, a prospective licensee is restricted from disclosing confidential information to any person or entity, except for "Permitted Parties." Permitted Parties include officers, directors, and employees of the prospective licensee, but only if they have previously executed a Confidentiality Agreement in favor of Budget. This agreement must be in a form satisfactory to Budget, and it must be delivered to Budget duly executed before the individual is considered a Permitted Party.
This requirement ensures that Budget maintains control over its confidential information and trade secrets, even during the evaluation phase by a prospective licensee. By requiring confidentiality agreements from anyone who gains access to the Operating Manual, Budget aims to prevent unauthorized use or disclosure of its proprietary information. This is a common practice in franchising to protect the brand's competitive advantage and operational methods.
For a prospective Budget licensee, this means that if they wish to share the Operating Manual with their team during the evaluation process, each individual must sign a confidentiality agreement approved by and submitted to Budget. Failure to comply with this requirement could result in a breach of the Confidentiality Agreement, leading to potential legal action, including injunctive relief and recovery of attorney's fees and court costs by Budget. Therefore, it is crucial for prospective licensees to adhere strictly to these confidentiality protocols.