Hertz 2012 Annual Report Download - page 40

ITEM 1. BUSINESS (Continued)
Franchisees Under Our Dollar Thrifty Brands
Both Dollar and Thrifty sell U.S. franchises on an exclusive basis for specific geographic areas, generally
outside the top 75 U.S. airport markets. Most franchisees are located at or near airports that generate a
lower volume of vehicle rentals than the airports served by company-owned locations. In Canada, Dollar
and Thrifty sell franchises in markets generally outside the top eight airport markets. The typical length of
a franchise is ten years with a renewal option for five years if certain conditions are met. The franchisee
may terminate the franchise for convenience upon 120 days written notice and Dollar and Thrifty may
terminate upon breach of the agreement or for cause as defined in the agreement.
Dollar and Thrifty offer franchisees the opportunity to dual franchise in smaller U.S. and Canadian
markets. Under a dual franchise, one franchisee can operate both the Dollar and the Thrifty brand, thus
allowing them to generate more business in their market while leveraging fixed costs.
Dollar and Thrifty license to franchisees the use of their respective brand service marks in the vehicle
rental and leasing and parking businesses. Franchisees of Dollar and Thrifty pay an initial franchise fee
generally based on the population, number of airline passengers, total airport vehicle rental revenues
and the level of any other vehicle rental activity in the franchised territory, as well as other factors. Dollar
and Thrifty offer their respective franchisees a wide range of products and services which may not be
easily or cost effectively available from other sources.
System Fees in the U.S.
Dollar—In addition to an initial franchise fee, each Dollar U.S. franchisee generally pays a system fee as a
percentage of rental revenue at airport locations and off-airport operations.
Thrifty—In addition to an initial franchise fee, each Thrifty U.S. franchisee generally pays a fee as a
percentage of rental revenue.
System Fees in Canada
All Dollar and Thrifty Canadian franchisees, whether operating a single-brand or co-brand location, pay a
monthly fee generally based on a percentage of rental revenue.
Franchisee Services and Products
Dollar and Thrifty provide their U.S. and Canadian franchisees a wide range of products and services,
including reservations, marketing programs and assistance, branded supplies, image and standards,
rental rate management analysis and customer satisfaction programs. Additionally, Dollar and Thrifty
offer their respective franchisees centralized corporate account and tour billing and travel agent
commission payments.
International
Dollar and Thrifty offer master franchises outside the U.S. and Canada, generally on a countrywide basis.
Each master franchisee is permitted to operate within its franchised territory directly or through
subfranchisees. At December 31, 2012, exclusive of the U.S. and Canada, Dollar had franchised
locations in 60 countries and Thrifty had franchised locations in 76 countries. These locations are in Latin
America, Europe, the Middle East, Africa and the Asia-Pacific regions. The Company offers franchisees
the opportunity to license the rights to operate either the Dollar or the Thrifty brand or both brands in
certain markets on a dual franchise or co-brand basis.
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