Which state's law applies to the Budget License Agreement, subject to state law?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section of the Budget License Agreement | Summary |
|---|---|---|
| q. Non-competition during the term of the franchise | 1.6 and Nondisclosure and Noncompetition Agreement | No involvement in other vehicle rental business or system in the United States. |
| r. Non-competition covenants after the franchise is terminated or expires | 11.9, 12.6, and Nondisclosure and Noncompetition Agreement | No competing business for one year in licensed territory or within five miles of licensed territory. |
| s. Modification of the agreement | 14.2(c) | Must be reduced to writing and signed by you and Budget. However, the Manual and Standards are subject to change. |
| t. Integration/merger clause | 14.2(a) | Only terms of license agreement, its exhibits, its schedules, the Standards and Transfer Requirements are enforceable. Any representations or promises outside of the disclosure document and license agreement may not be enforceable. Notwithstanding the foregoing, nothing in this or any related agreement is intended to disclaim the express representations made in the Franchise Disclosure Document, its exhibits and amendments. |
| u. Dispute resolution by | None | |
| arbitration or mediation | ||
| v. Choice of forum | 14.9 | Subject to state law, you agree to the jurisdiction of New Jersey courts. |
| w. Choice of law | 14.8 | Subject to state law, New Jersey law applies. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 66–70)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the Budget License Agreement specifies that New Jersey law applies, subject to state law. This is outlined in Section 14.8 of the agreement. Additionally, Section 14.9 states that franchisees agree to the jurisdiction of New Jersey courts, also subject to state law.
For a prospective Budget franchisee, this means that while the agreement is governed by New Jersey law, the laws of the state in which the franchise operates may also apply. This could potentially create complexities if there are conflicts between New Jersey law and local state laws. Franchisees should be aware that legal disputes may be subject to the jurisdiction of New Jersey courts, which could require them to travel to New Jersey for legal proceedings.
It is common practice in franchising for the franchise agreement to specify which state's laws govern the agreement. This helps to provide clarity and predictability in the event of a dispute. However, it is also important for franchisees to understand how their local state laws may impact their franchise operations. Prospective franchisees should consult with an attorney to fully understand the legal implications of the choice of law and forum provisions in the Budget License Agreement.