Risk Score
Pending analysis
Investment Range
$625,500 - $1,588,400
Franchise Fee
$45,000
Total US Locations
1,900
Business Summary
Avis operates a franchise system that allows individuals to own and run car rental businesses. Avis franchisees rent automobiles without drivers to the general public for short periods, typically 180 days or less, under the well-known Avis brand. These businesses follow Avis's standardized operating methods and offer various related products and services, including optional insurance, loss damage waivers, refueling services, and rental of items like child seats and GPS devices.
Corporate History
Avis Rent A Car System, LLC was initially incorporated in 1986, though its direct predecessor, Avis Rent A Car System, Inc. (ARACS), dates back to 1946. Over the years, Avis has undergone several name changes and corporate restructuring, eventually becoming a wholly-owned subsidiary of Avis Budget Group, Inc. (ABG) after a major corporate separation in 2006. Avis has been offering licenses or franchises since 1955. Avis and its affiliates also operate and franchise other car rental brands, including Budget Rent A Car and Payless Car Rental.
Financial Overview
Investment Range
$625,500 - $1,588,400
Franchise Fee (Low)
$45,000
Franchise Fee (High)
$50,000
Royalty %
7.5%
Equipment Costs (Low)
$40,000
Equipment Costs (High)
$103,000
Working Capital
$63,700
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Avis Budget Group's financial condition, as noted in the special risks section and the financial statements, indicates a concerning financial situation, particularly a substantial net loss of $1.821 billion in 2024, following net incomes in 2023 and 2022. The company also recorded a $2.3 billion non-cash impairment charge in 2024 related to its US and Canadian vehicle fleets, driven by a change in strategy to accelerate fleet rotations. The independent auditors highlighted significant estimation uncertainties in vehicle depreciation for risk vehicles and self-insurance reserves for public liability and property damage claims, both requiring substantial judgment. These factors collectively raise questions about Avis's financial ability to provide ongoing services and support to its franchisees, as explicitly stated in the FDD's Special Risks section.
Financing Details
Avis states that it does not offer any direct or indirect financing to its franchise owners and does not guarantee any franchisee's notes, leases, vendor purchases, or any other obligations. However, Avis is listed on the SBA Franchise Directory, and if franchisees secure financing through the SBA, they are required to sign an SBA Addendum to the franchise agreement.
Performance Metrics
Total US Locations
1,900
Franchised Units
186
Corporate Units
1,714
Franchising Since
1955
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
20
Litigation Summary
Avis has a significant history of litigation, including several ongoing class action lawsuits and a shareholder derivative action as of December 2024, concerning consumer fraud, billing practices, and misrepresentations. There are pending class action lawsuits alleging fraudulent counter sales (add-ons and fuel charges), violation of the New Jersey Consumer Fraud Act regarding speeding violations and administrative fees, and claims of systematically refusing to rent vehicles for advertised prices. The shareholder derivative action, filed in April 2024, alleges violations of federal securities laws and breaches of fiduciary duties. In the past 10 years, Avis has concluded numerous cases, many involving class action settlements related to fees, commissions, and independent contractor status, with substantial payouts in legal fees and settlement costs. Notably, a class action regarding E-Toll activation fees settled in June 2022 for $9.4 million, a complaint about unauthorized charges settled in December 2022 for $20,000, and a purported class action regarding unauthorized SLI/ALI insurance sales was dismissed in March 2023 with class counsel awarded over $8.9 million in fees and costs, and Avis Budget Car Rental making up to $33.9 million available for settlement. Budget, an affiliate, also has ongoing FTC consent orders regarding fuel charge disclosures.
Bankruptcy History
Avis states that no bankruptcy information is required to be disclosed in this item.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew their Avis franchise agreement, franchisees must meet several conditions at least 30 days before the current term expires. They must not be in default of any agreement provisions, be the original beneficial owner (or a permitted transferee), pay the then-current renewal fee, and sign a general release form. Franchisees will also need to sign the version of the License Agreement that is current at the time of renewal, which may include terms and conditions that are materially different from their original contract.
Training & Support Program
Franchisor Assistance
Avis provides extensive support to its franchisees both before and during their operations. Before opening, Avis assists with approving the trade name and territory, calculating initial fees, setting minimum car requirements, and approving the business location. Avis also furnishes the confidential operating manual and provides information on necessary equipment, signs, and vehicles. During operation, Avis offers ongoing training through web-based seminars and field visits, provides guidance on administrative procedures, and suggests rental rates that franchisees must honor, especially for National Accounts. Avis also manages the mandatory online Wizard reservation system, resolves customer complaints (paying up to $150 without prior approval), and centralizes travel agency commission payments.
Initial Training Hours
74
Training Location
Online/virtual
Ongoing Support
Avis provides ongoing support to its franchisees through various channels. This includes regular web-based training seminars and other programs to assist general managers and employees with operations. Avis may require franchisees, their general managers, and other managerial personnel to complete new and refresher web-based training. Additionally, Avis mandates attendance at periodic conventions or seminars that Avis holds for the network. Avis also provides essential services such as making rental reservations available through the Wizard system, resolving customer complaints (with payments on behalf of the franchisee), and centrally paying travel agency commissions.
Franchise Requirements
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Commercial
Owner Participation
Supervisory
Territory Type
Non-Exclusive
Territory Size Requirements
Avis defines franchise territories based on various factors such as population, the presence of an airport, and the franchisee's operational capabilities. Territories are typically described by political boundaries, like a city or county, or occasionally as a circle around the location. Avis uses industry parameters, census data, population densities, zip code boundaries, and projected growth to determine these boundaries, with a minimum population of 25,000 people usually included.
Staffing Notes
Avis requires its franchisees to employ at least one full-time General Manager who has successfully completed Avis's training program. This General Manager must dedicate their entire working hours to managing, operating, and developing the Avis franchise in accordance with Avis's standards and manual. While the General Manager does not need to have an ownership stake in the franchise, an on-premises supervisor who has completed training is also required.