After the Dollar Rent A Car agreement terminates, for how long is the post-term non-compete period?
Dollar_Rent_A_Car Franchise · 2025 FDDAnswer from 2025 FDD Document
24. COVENANT NOT TO COMPETE
- 24.1. Covenant Not to Compete. For a period commencing upon the Effective Date and expiring twelve (12) months after (i) a Transfer permitted by Section 21, or (ii) the date of termination or expiration of this Agreement for any reason (including due to nonrenewal) or the date on which You cease to operate Your Franchised Business, whichever is later, You and Your Owners shall not, directly or indirectly, for Yourselves or for any other person or entity, alone or through or on behalf of others:
- (a) Own, engage in, be employed by, advise, assist, lease or sublease to, invest in, franchise, lend money to, or have any other interest in, whether financial or otherwise, any Vehicle Rental Business (except under a franchise from Us or Our Affiliate):
- (i) Within the Territory franchised in this Agreement;
- (ii) Within one hundred (100) miles of the border of the Territory;
- (iii) Within the territory of any other System franchisee;
- (iv) Within a ten (10) mile radius of the border of the territory of any other System franchisee; or
- (v) Within a ten (10) mile radius of any Franchised Business operated by Us or Our Affiliate; or
- (a) Own, engage in, be employed by, advise, assist, lease or sublease to, invest in, franchise, lend money to, or have any other interest in, whether financial or otherwise, any Vehicle Rental Business (except under a franchise from Us or Our Affiliate):
(b) Engage in a transaction that would have been a Transfer had it occurred during the term of the Agreement or is comparable to a Transfer (as a post-termination or postexpiration transaction), and is to an entity that will operate a Vehicle Rental Business.
24.2. Injunction for Violation.
You acknowledge that Your violation of the terms of this Section 24 would result in irreparable injury to Us for which no adequate remedy at law may be available, and You, accordingly, consent to the issuance of an injunction prohibiting any conduct by You in violation of the terms of this Section 24.
Source: Item 23 — RECEIPTS (FDD pages 102–301)
What This Means (2025 FDD)
According to the 2025 Dollar Rent A Car Franchise Disclosure Document, both the franchisee and their owners are subject to a post-term non-compete covenant. This covenant begins on the effective date and lasts for twelve months after the transfer permitted by Section 21, the termination or expiration date of the agreement for any reason (including non-renewal), or the date the franchisee ceases to operate their franchised business, whichever is later.
During this 12-month period, the franchisee and their owners are prohibited from engaging in any vehicle rental business, with some limitations. This includes owning, being employed by, advising, assisting, leasing to, investing in, franchising, lending money to, or having any interest in a vehicle rental business. The restrictions apply within the territory franchised in the agreement, within 100 miles of the border of the territory, within the territory of any other Dollar Rent A Car franchisee, within a 10-mile radius of the border of any other franchisee's territory, or within a 10-mile radius of any Dollar Rent A Car business operated by the company or its affiliates.
The Dollar Rent A Car FDD states that violating the non-compete terms would cause irreparable injury to the company, entitling them to seek an injunction against the franchisee. This means Dollar Rent A Car can pursue legal action to prevent any conduct that violates the non-compete agreement.
It's important for prospective Dollar Rent A Car franchisees to understand the scope and limitations of the post-term non-compete agreement, as it significantly restricts their ability to engage in the vehicle rental business after the franchise agreement ends. Franchisees should seek legal counsel to fully understand the implications of this covenant and how it may affect their future business opportunities.