Does the Budget Rent A Car System License Agreement specify any geographic limitations on competition?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
Budget grants licenses to operate a Budget Franchise to persons with the ability to operate and promote a Budget Franchise in a particular geographic territory. Budget will assign you a territory in which to operate under the Budget License Agreement and in which you choose your business locations, subject to Budget's approval (see Item 11) Because the size of the licensed territory depends on factors like population, the presence or absence of an airport, and your operational abilities and experience, it is not possible to specify the minimum area granted to a Budget Franchise. The territory is usually described by political boundaries (for example, part of a city or county), but in certain areas might be a circle with your location at the center. Budget may use accepted industry parameters, census tracts, population densities, zip code boundaries, buying patterns, traffic counts, and projected commercial and residential growth to determine the territory's boundaries. However, a territory will not usually include a population of less than 25,000 people. During the term of your Budget License Agreement and subject to your compliance with all of your other obligations under the Budget License Agreement, Budget will not operate on its own behalf, or grant a license to another party to operate, a Budget Franchise within your territory.
You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.
Nothing in the Budget License Agreement prohibits Budget or its parent company, subsidiaries, or affiliates from: (a) engaging in the activities referred to above; (b) operating or granting others the right to operate, Budget Rent A Car businesses in the licensed territory that offer to rental vehicle other than the Vehicles including, but not limited to, renting or leasing motor vehicles that are designed, used or maintained for the transportation of property, cargo or goods (collectively defined as "Trucks"); or (c) selling their assets, engaging in a public offering or private placement of ownership interests, merging with or acquiring other corporations or entities, or being acquired by another corporation or entity (including a corporation or entity that owns or operates systems or chains that may be competitive with or similar to the Network).
Source: Item 22 — CONTRACTS (FDD pages 79–80)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, Budget grants licenses for a specific geographic territory, but these territories are not exclusive. The size of the territory depends on factors such as population and the presence of an airport. While Budget will not operate or grant another franchise within your territory during the term of the License Agreement, franchisees may face competition from other franchisees, company-owned outlets, or other distribution channels. The territory will usually be described by political boundaries, but in certain areas might be a circle with your location at the center. However, a territory will not usually include a population of less than 25,000 people.
Budget retains the right to engage in activities or grant others the right to operate Budget Rent A Car businesses within the licensed territory that offer to rental vehicle other than the Vehicles including, but not limited to, renting or leasing motor vehicles that are designed, used or maintained for the transportation of property, cargo or goods (collectively defined as "Trucks").
This means that while Budget provides a defined territory, franchisees should anticipate competition from various sources, including other Budget franchisees, company-owned locations, and potentially other brands or channels controlled by Budget. The lack of exclusivity is a common practice in franchising, allowing franchisors to maximize market penetration, but it also places the onus on the franchisee to effectively compete within their assigned territory.