During the term of the agreement, what vehicle rental businesses are Budget licensees, their beneficial owners, or their immediate family members prohibited from participating in?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
Budget would be unable to protect its confidential information against unauthorized use or disclosure and would be unable to encourage a free exchange of ideas and information among the Network and between Licensee and Budget if Licensee, its beneficial owners or persons related to Licensee or its beneficial owners were permitted to engage in other businesses competing with Rental Businesses or Budget. Accordingly, neither Licensee, its beneficial owners, any immediate family member of Licensee or its beneficial owners, nor any of Licensee's principal officers or directors will, during the term of this Agreement, directly or indirectly, participate or engage in as an owner, partner, director, officer, employee, consultant or agent, or in any other capacity, in any other vehicle rental business, car sales or sharing business or system located or operating anywhere in the United States (or its territories or possessions), except other vehicle rental or vehicle sharing businesses operated under license agreements with Budget or, with Budget's consent, any of the Related Entities.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, during the term of the License Agreement, Budget licensees, their beneficial owners, and their immediate family members are restricted from participating in certain vehicle rental businesses. Specifically, they cannot directly or indirectly engage in any other vehicle rental business, car sales or sharing business or system located or operating anywhere in the United States (or its territories or possessions).
However, there are exceptions to this restriction. Licensees, their beneficial owners, and their immediate family members can participate in other vehicle rental or vehicle sharing businesses operated under license agreements with Budget. They may also participate in such businesses with Budget's consent, specifically any of the Related Entities.
This clause ensures that Budget can protect its confidential information and encourage open communication within its network. By preventing franchisees and their close associates from engaging in competing businesses, Budget aims to maintain a cohesive and collaborative environment, fostering the brand's integrity and market position. This non-compete obligation is a standard practice in franchising to protect the franchisor's business model and market share.