What section of the FDD outlines Budget's requirements for location and vehicles?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
- 8.1 Location and Vehicles. Licensee agrees to develop the Territory to achieve and maintain the maximum possible market penetration for the Rental Business by opening Locations by the dates, and in the local markets and commercial airports listed in the Summary Pages (Section 4), and to actively and continuously operate the Rental Business at all of those Locations throughout the term of this Agreement; except that upon forty-five (45) days prior written notice to Budget, Licensee may cease operating the Rental Business at any commercial airport listed in the Summary Pages (Section 4), without being in default of this provision, in the event all airlines eliminate service at such airport. To further achieve and maintain the maximum possible market penetration within the Territory, Licensee agrees to maintain at least the number of Vehicles available for rent within the Territory by the dates listed in the Summary Pages (Section 11) ("Market Penetration Quotas"). To determine the Market Penetration Quotas, Budget will rely upon factors such as population increases and the presence or absence of an airport. 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 computations for adjusting Market Penetration Quotas. The Location and Vehicle requirements identified in the Summary Pages (Sections 4 and 11) reflect the minimum market penetration acceptable to Budget.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the requirements for location and vehicles are outlined in Paragraph 8.1 of Item 23, titled "Receipts". This section states that the franchisee, referred to as the Licensee, must develop their territory to achieve maximum market penetration by opening locations as specified in the Summary Pages (Section 4). The franchisee must also actively operate the rental business at these locations throughout the term of the agreement. However, the franchisee can cease operations at a commercial airport listed in the Summary Pages (Section 4) with forty-five (45) days' prior written notice to Budget if all airlines eliminate service at that airport.
To further ensure market penetration, the franchisee must maintain at least the number of vehicles available for rent within the territory by the dates listed in the Summary Pages (Section 11), which are referred to as "Market Penetration Quotas." Budget determines these quotas based on factors such as population increases and the presence or absence of an airport. Budget may also use industry parameters, census tracts, population densities, zip code boundaries, buying patterns, traffic counts, and projected commercial and residential growth to adjust these quotas.
In essence, this section of the FDD emphasizes Budget's control over location and vehicle requirements to ensure adequate market penetration. The specific details regarding locations and vehicle numbers are found in the Summary Pages (Sections 4 and 11), which are critical documents for prospective franchisees to review carefully. Franchisees need to be aware that failure to meet these requirements could result in loss of territorial exclusivity, as stated in Paragraph 11.11.