What obligations does a Budget licensee have upon termination of the license agreement, as outlined in Article XI?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
- 11.6 Obligation of Licensee on Termination.
Upon termination of this Agreement and license (which for all purposes of this Agreement will mean termination by either party for any reason or expiration of the term of this Agreement), Licensee will: (a) pay to Budget, on or before noon on the effective date of termination, such License Fees, the unpaid balance of the Initial License Purchase Fee and all other fees or monies Licensee owes to Budget or any of the Related Entities; Licensee waives any right or claim to offset the amounts due to Budget or any of the Related Entities with amounts due to Licensee; (b) promptly pay all fees or monies Licensee owes to other Network licensees or any other person or entity (e.g., phone bills, rent or airport concession fees), whether incurred under this Agreement or otherwise in the conduct of the Rental Business; (c) not thereafter, directly or indirectly, identify itself in any manner as an Budget licensee or use the System, or any part thereof, the name "Budget" or any variation thereof, or any of the Marks, forms, slogans, signs, symbols, devices, or materials constituting part of the System; (d) return to Budget all Manual, Standard Rental Agreements, advertising materials, and all other materials bearing the "Budget" name or containing any of the Standards; (e) take all steps necessary to transfer to Budget, or to such person as Budget may direct, all telephone numbers, facsimile and electronic communication lines, and electronic addresses and domain names used by it in the conduct of the Rental Business, and, upon Budget's request, advise the telephone company and any third party service providers serving the Territory and other appropriate parties that Licensee has no further interest in such telephone numbers, facsimile and electronic communication lines, and electronic addresses and domain names and approve their transfer to Budget or to such other person as Budget may direct; (f) upon notice from Budget, take all steps necessary to effectuate
the sale, transfer or assignment to Budget of the airport licenses, concession agreements, leases and permits as specified in Paragraph 8.2 and, at Budget's sole election, any other agreements pertaining to the use of real estate which was used in conjunction with Licensee's terminated Rental Business, including any or all Locations, electronic addresses and domain names used by Licensee in the conduct of the Rental Business and airport licenses, leases and permits as specified in Paragraph 8.2 herein; (g) take such action as will be necessary to cancel any assumed name or equivalent registration which contains the "Budget" name and any website established in connection with operating the Rental Business; (h) take all steps necessary to transfer to Budget, or to such person as Budget may direct, all existing reservations and open rental agreements; (i) take all steps to properly secure and or destroy customer PII (as defined in Paragraphs 9.11 and 9.21) in accordance with applicable laws and in accordance with Budget's data retention policies (which are applicable to any data obtained through Budget, and (j) promptly remove and destroy all Budget signage. Licensee will furnish Budget, within thirty (30) days after termination of this Agreement, evidence satisfactory to Budget of its compliance with these obligations.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, Article XI details the licensee's obligations upon termination of the franchise agreement. Upon termination, the licensee must pay all outstanding fees, including license fees, the unpaid balance of the initial license purchase fee, and any other monies owed to Budget or its related entities, waiving any right to offset these amounts with what Budget or its related entities may owe the licensee. The licensee is also responsible for promptly paying all fees owed to other network licensees or any other person or entity, such as phone bills, rent, or airport concession fees, regardless of whether these were incurred under the agreement.
Furthermore, the licensee must cease identifying themselves as a Budget licensee and discontinue using the Budget system, name, or any related marks, forms, slogans, signs, symbols, devices, or materials. All manuals, standard rental agreements, advertising materials, and other materials bearing the Budget name or containing any of the standards must be returned to Budget. The licensee is required to transfer all telephone numbers, facsimile and electronic communication lines, electronic addresses, and domain names used in the rental business to Budget or its designee. They must also advise the telephone company and third-party service providers of this transfer.
Additionally, the licensee must take steps to transfer airport licenses, concession agreements, leases, and permits as specified in Paragraph 8.2 to Budget. They must also cancel any assumed name registrations containing the "Budget" name and any website established for the rental business. The licensee is obligated to transfer all existing reservations and open rental agreements to Budget or its designee. They must properly secure or destroy customer PII (as defined in Paragraphs 9.11 and 9.21) in accordance with applicable laws and Budget's data retention policies, and promptly remove and destroy all Budget signage. The licensee must provide Budget with evidence of compliance with these obligations within thirty days after termination.
These obligations are fairly standard in franchise agreements to ensure a clean break and protect the franchisor's brand and system. Failure to meet these obligations could expose the former franchisee to legal action. Prospective Budget franchisees should carefully review Article XI to fully understand their responsibilities upon termination, whether the termination is initiated by the franchisee or Budget.