After termination or expiration of the Budget franchise, what is the geographic scope of the non-compete covenant?

According to Budget's 2025 Franchise Disclosure Document, franchisees are subject to certain non-competition restrictions even after the franchise agreement terminates or expires. Specifically, Budget franchisees are prohibited from engaging in any competing business for a period of one year following the termination or expiration of the franchise. This restriction applies within the franchisee's licensed territory or within five miles of that licensed territory.

This post-term non-compete covenant means that a former Budget franchisee cannot immediately open a competing vehicle rental business in the same geographic area where they operated their Budget franchise. The restriction is limited to one year, which is a fairly standard duration for non-competes in the franchise industry. The geographic scope is also relatively limited, focusing on the licensed territory and a small buffer zone around it.

For a prospective Budget franchisee, this means carefully considering the location of their franchise and the potential for future business opportunities. If a franchisee plans to exit the Budget system and start a competing business, they will need to do so outside of their licensed territory and beyond the five-mile radius, or wait until the one-year period has elapsed. This restriction is designed to protect Budget's market share and customer relationships, but it could limit a former franchisee's options.