Is Dollar Rent A Car permitted to terminate a Franchise Agreement without cause?
Dollar_Rent_A_Car Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Franchise | Summary |
|---|---|---|
| Agreement | image of the Franchised System as specified in the Operations Guide; (g) you shall have achieved during the term of the Franchise Agreement the performance requirements set forth and described in Attachment B hereto (and, with respect to any applicable renewal periods, such performance requirements as may be designated by us with respect thereto); and (h) we have a continuing program for the conduct and operation of a Franchised Business and are offering new franchises to conduct a Franchised Business at the time of such election by you and upon each renewal. | |
| d. Termination | 19.1 | With or without cause with not less than 180 days prior written notice |
| by you | to us; payment of an "Early Termination Fee" (liquidated damages), calculated by multiplying the minimum amount per year set forth in Attachment A (or, if no minimum amount is specified, the average annual franchise fee paid by you to date during the Term) by the number of years remaining on the term of your Franchise Agreement as of the date of termination (adjusted in each case on a pro rata basis for partial years and for partial terminations if applicable). | |
| e. Termination | Not | We may not terminate your Franchise Agreement without cause. |
| by us without | Applicable | |
| cause | ||
| f. Termination | 19.2, 19.3, | We have the right to terminate your Franchise Agreement for cause. |
| by us with cause | and 19.4 | |
| g. "Cause" defined –curable defaults | 19.4 | Your Franchise Agreement may be terminated if you: fail to pay us or our affiliate any monies due under the Franchise Agreement or any other agreement with us or our affiliates within 30 days after delivery of notice to you; |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 77–84)
What This Means (2025 FDD)
According to Dollar Rent A Car's 2025 Franchise Disclosure Document, Dollar Rent A Car cannot terminate a Franchise Agreement without cause. However, the franchisee is able to terminate the agreement with or without cause, providing that they give Dollar Rent A Car at least 180 days prior written notice.
If the franchisee chooses to terminate the agreement, they must also pay an "Early Termination Fee" to Dollar Rent A Car. This fee is calculated by multiplying the minimum amount per year set forth in Attachment A (or, if no minimum amount is specified, the average annual franchise fee paid by you to date during the Term) by the number of years remaining on the term of your Franchise Agreement as of the date of termination, adjusted on a pro rata basis for partial years and for partial terminations if applicable.
This is a fairly typical clause in franchise agreements, as it protects the franchisee from arbitrary termination by the franchisor. However, it also means that the franchisee is bound to the agreement for the full term, unless they are willing to pay the early termination fee. Prospective franchisees should carefully consider this clause before signing a Franchise Agreement.