Under the Budget License Agreement, what activities are Budget or its affiliates not prohibited from engaging in within a franchisee's territory?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
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).
Budget reserves all rights not expressly granted to you under your Budget License Agreement, including the rights of Budget and its affiliates to: (1) operate, and grant others the right to operate Budget Franchises outside your licensed territory and, under certain circumstances (for National Accounts or if
you fail to comply with the Budget License Agreement, as described below), inside the licensed territory, on any terms and conditions Budget deems appropriate; (2) hire and/or appoint sales persons and general sales agents and negotiate and enter into local, regional, national, and international sales and marketing agreements with persons or entities located within your licensed territory; (3) use Budget's Proprietary Marks for any purpose within your licensed territory, other than for the operation of a Budget Rent A Car business location offering for rental the vehicles offered through your Budget Franchise ("Vehicles"), subject to Budget's rights under the Budget License Agreement; and (4) operate, and grant others the right to operate, businesses (including businesses that offer for rent or sale Vehicles and other motorized and non-motorized equipment and parking business) outside and within the licensed territory under trademarks different than Budget's Proprietary Marks.
Budget and its affiliates have established, and may in the future establish, other franchises or company-owned outlets or other channels of distribution selling or leasing products or services similar to those of a Budget Franchise under different trademarks or under Budget's Proprietary Marks. You may not use alternative distribution channels to make sales and you will receive no compensation for our sales through alternative distribution channels.
As described in Item 1, our affiliates currently operate and grant franchises for businesses that rent vehicles without drivers to the general public.
Source: Item 12 — TERRITORY (FDD pages 61–63)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the Budget License Agreement does not prohibit Budget or its parent company, subsidiaries, or affiliates from several activities within a franchisee's territory. These include engaging in activities generally, operating or granting others the right to operate Budget Rent A Car businesses that offer rental vehicles other than the standard vehicles, specifically renting or leasing trucks (defined as vehicles for transporting property, cargo, or goods), and selling their assets, engaging in public or private offerings of ownership interests, merging with or acquiring other corporations or entities, or being acquired by another corporation or entity, even if that entity owns or operates competitive systems. This means that while franchisees are granted a territory, Budget retains considerable freedom to operate and expand its business, even in ways that might compete with its own franchisees.
Budget also reserves rights not expressly granted to the franchisee, including the right to operate and grant others the right to operate Budget franchises outside the franchisee's licensed territory and, under certain circumstances such as for National Accounts or franchisee non-compliance, inside the licensed territory. Budget can hire sales personnel and enter into sales and marketing agreements within the franchisee's territory. They can also use Budget's trademarks for purposes other than operating a Budget Rent A Car business offering standard rental vehicles. Furthermore, Budget can operate businesses, including those offering vehicles and other equipment for rent or sale, under different trademarks both outside and within the licensed territory.
Budget's affiliates may operate and grant franchises for businesses that rent vehicles without drivers to the general public, and these locations may be located in the franchisee's licensed territory and solicit orders from customers within that territory. Similarly, a Budget franchisee may solicit orders from customers of Budget's affiliates' business locations. Budget is not obligated to intervene in conflicts between Budget Franchise owners and its affiliates' business operators. This highlights the potential for competition and overlap between Budget franchises and related businesses, with Budget maintaining the flexibility to manage these relationships as it sees fit.
Prospective franchisees should be aware that these provisions mean the territory granted is not entirely exclusive. Budget retains significant rights to operate and license other businesses, including potentially competitive ones, within the same area. This could impact a franchisee's market share and profitability. It is important for potential franchisees to carefully consider these factors and evaluate the potential for competition from Budget and its affiliates when assessing the opportunity.