Under what circumstances might Dollar Rent A Car require a security deposit from a franchisee?
Dollar_Rent_A_Car Franchise · 2025 FDDAnswer from 2025 FDD Document
- 12.32. Security.
We may require You to post a deposit in the form of cash or a non-revocable letter of credit or other form of security acceptable to Us, to secure Your or any of Your Affiliates' obligations to Us and Our Affiliates, whether under this Agreement or otherwise.
The initial amount of such security deposit, if required, will have been provided to you before you sign this Agreement.
Thereafter, we may increase such amount from time to time, in Our sole discretion, based upon various relevant factors, such as a change in the revenues or the financial condition related to You, any guarantor or Your Franchised Business.
For purposes of clarity, if such security is drawn upon to satisfy any obligation related to You or Your Affiliates as provided in the first sentence of this Section 12.32, You shall be obligated to reinstate the full amount of such security deposit within five (5) days and failure to do so will be deemed a material breach of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 102–301)
What This Means (2025 FDD)
According to the 2025 Dollar Rent A Car Franchise Disclosure Document, Dollar Rent A Car has the right to require a security deposit from a franchisee. This deposit can be in the form of cash, a non-revocable letter of credit, or another form of security that Dollar Rent A Car finds acceptable. The purpose of this security deposit is to ensure that the franchisee, or any of their affiliates, fulfills their obligations to Dollar Rent A Car and its affiliates, whether these obligations arise from the Franchise Agreement itself or any other agreement.
The initial amount of the security deposit, if Dollar Rent A Car requires one, will be communicated to the franchisee before the Franchise Agreement is signed. However, Dollar Rent A Car retains the discretion to increase the amount of the security deposit over time. This increase can be based on factors such as changes in the franchisee's revenues, their financial condition, the financial condition of any guarantor, or the performance of the franchised business.
If Dollar Rent A Car needs to draw upon the security deposit to cover any obligations of the franchisee or their affiliates, the franchisee is required to restore the security deposit to its full amount within five days. Failure to do so constitutes a material breach of the Franchise Agreement. This provision ensures that Dollar Rent A Car maintains a consistent level of security against potential franchisee defaults or non-compliance.