Risk Score
Pending analysis
Investment Range
$625,500 - $1,588,400
Franchise Fee
$45,000
Min Cash Required
$625,500
Total US Locations
1,371
Business Summary
Budget Rent A Car System, Inc. offers franchises for businesses focused on renting automobiles without drivers to the general public. These rental periods are typically 180 days or less, operating under the established Budget trademarks and proprietary system.
Corporate History
Budget Rent A Car System, Inc. has a long history in the car rental industry, tracing its franchising services back to 1960 through various predecessors. The current franchisor, Budget Rent A Car System, Inc., was incorporated in Delaware on July 26, 2002, and acquired the rights to the Budget trademarks and car rental system on November 22, 2002. Budget began offering franchises under its current corporate structure in April 2003 and has operated vehicle rental businesses, both directly and through independent agents, since November 2002. The company is a wholly owned subsidiary of Avis Budget Car Rental, LLC, which is a subsidiary of Avis Budget Group, Inc. In 2006, Avis Budget Group, Inc. was formed after a separation from its former parent company, Cendant Corporation.
Financial Overview
Investment Range
$625,500 - $1,588,400
Franchise Fee (Low)
$45,000
Franchise Fee (High)
$50,000
Minimum Cash Required
$625,500
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
Budget Rent A Car System, Inc.'s financial condition has been flagged in its Special Risks section, which questions the franchisor's financial ability to provide services and support to franchisees. The company's independent auditors identified several critical audit matters in 2024, highlighting significant estimation uncertainty and judgments related to vehicle depreciation for risk vehicles, the subjectivity of self-insurance reserves for public liability and property damage claims, and the impairment of long-lived assets, particularly U.S. vehicles. In 2024, Budget recorded a significant $2.3 billion non-cash impairment charge due to a change in fleet strategy, accelerating vehicle rotations and shortening useful lives. Additionally, the company recognized a $180 million charge for vehicles held for sale and an unprecedented adjustment to self-insurance reserves for allocated loss adjustment expense. While the auditors provided an unqualified opinion, these items indicate areas of financial complexity and recent significant charges.
Financing Details
Budget Rent A Car System, Inc. does not offer any direct or indirect financing options to its franchisees. This means Budget franchisees will need to secure their own funding from third-party sources. Budget does not guarantee any loans, leases, or other obligations for its franchisees. However, Budget is listed on the SBA Franchise Directory, and if franchisees obtain financing through the U.S. Small Business Administration, they are required to sign an SBA Addendum to their Franchise Agreement.
Performance Metrics
Total US Locations
1,371
Franchised Units
174
Corporate Units
1,197
Franchising Since
1960
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
16
Litigation Summary
Budget Rent A Car System, Inc. and its affiliates have been involved in several litigation cases, with multiple cases currently pending or recently concluded. As of December 2024, Budget is facing five pending class-action lawsuits, including allegations against an affiliate for fraudulent counter sales, breach of good faith, and unjust enrichment, as well as a separate class action for violations of the New Jersey Consumer Fraud Act regarding speeding violations and administrative fees. Two shareholder derivative actions were filed in April and September 2024, alleging federal securities law violations and breaches of fiduciary duties. Additionally, two complaints filed in September 2024 allege that Avis and Budget systematically cheated consumers by refusing to rent vehicles for advertised prices. Budget also operates under an FTC Consent Order from 2008, which mandates specific disclosures regarding fuel charges until January 2028. Within the past three years (from April 2025), Budget settled a class action in 2022 regarding unauthorized credit card charges for $20,000. Another class action concerning supplemental liability insurance, filed in 2013, was dismissed with prejudice in March 2023, with class counsel awarded over $8.5 million in fees. A separate class action from 2011 alleging non-disclosure of E-Toll activations and fees was settled in June 2022 for $2.7 million in settlement costs. Other past litigations within the last decade include an agency operator misclassification case settled in 2018 for $1,758,000, and a Canadian Competition Bureau settlement in 2016 for deceptive marketing practices.
Bankruptcy History
Budget Rent A Car System, Inc. has no bankruptcy history to report.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew their franchise agreement, Budget Rent A Car System, Inc. franchisees must meet several conditions at least 30 days before the current term expires. These conditions include not being in default of any part of their agreement, being the original beneficial owner or signing the then-current version of the License Agreement (which may have materially different terms), paying the current renewal fee, and signing a general release of claims against Budget and its affiliates.
Training & Support Program
Franchisor Assistance
Before opening, Budget Rent A Car System, Inc. helps franchisees by approving their trade name and territory, providing initial instruction for general managers and employees, calculating the initial license purchase fee, establishing minimum annual license fees and the required number of rental offices, and setting initial automobile requirements and market penetration quotas. Budget also approves the selected location for the franchise, lends a copy of its confidential Manual, and provides information on necessary equipment, signs, fixtures, supplies, and vehicles. During operation, Budget provides ongoing operating training and assistance through web-based seminars, representatives, or other programs, offering advice and guidance for establishing administrative, bookkeeping, accounting, and fleet financing procedures. Budget may advertise suggested rental rates and expects franchisees to honor them, especially for Corporate Rate Program customers. Budget also evaluates and approves proposed websites and processes requests for franchise transfers. Critically, Budget, through Avis Budget Car Rental, makes rental reservations available via the Budget Reservations System, resolves customer complaints by making payments on behalf of franchisees (up to $150 without prior approval), and handles centralized payment of travel agency commissions.
Initial Training Hours
74
Training Location
Online/virtual (Workday Learning); on-the-job instruction or at other locations may be required
Ongoing Support
Budget Rent A Car System, Inc. provides ongoing operating training and assistance through web-based seminars, representatives, or other programs, which may require franchisee and managerial personnel attendance. Budget communicates these requirements via System Bulletins. Franchisees and their General Managers must also attend periodic conventions or seminars held for the Network. Budget's assistance includes advice and guidance for establishing administrative, bookkeeping, accounting, and general operating procedures, as well as the acquisition, disposition, and financing of fleet and equipment. Budget, along with Avis Budget Car Rental, also resolves customer complaints and processes travel agency commissions centrally.
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
absentee-allowed
Territory Type
non-exclusive
Territory Size Requirements
Budget Rent A Car System, Inc. territories are defined based on factors such as population, the presence or absence of an airport, and the franchisee's operational abilities and experience. While a minimum area cannot be specifically detailed, territories are typically described by political boundaries like part of a city or county, or in some cases, as a circle with the location at its center. Budget uses accepted industry parameters, census tracts, population densities, zip code boundaries, buying patterns, traffic counts, and projected commercial and residential growth to determine territory boundaries. However, a territory will not usually include a population of less than 25,000 people.
Staffing Notes
Budget Rent A Car System, Inc. requires its franchisees to employ at least one full-time General Manager who has successfully completed Budget's instruction program. This General Manager must dedicate their entire normal business hours to the management, operation, and development of the Budget Franchise, adhering to the company's Standards and Manual. The General Manager is not required to hold an equity interest in the franchise. An on-premises supervisor must also successfully complete Budget's training program.