Hertz 2013 Annual Report Download - page 16

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U.S. franchisees ordinarily are limited as to transferability without our consent and are terminable by us only for cause or after a fixed term.
Franchisees in the United States may generally terminate for any reason on 90 days' notice. In Europe and certain other international
jurisdictions, franchisees typically do not have early termination rights. Initial license fees or the price for the sale to a franchisee of a
company-owned location may be payable over a term of several years. We continue to issue new licenses and, from time to time, purchase
franchisee businesses.
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 five to ten years with a renewal option for five years if certain conditions are met. The franchisee may terminate the franchise
for convenience upon 90 to 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.
Other 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, 2013, exclusive of the U.S. and
Canada, Dollar had franchised locations in 55 countries and Thrifty had franchised locations in 69 countries. These locations are in Latin
America, Europe, the Middle East, Africa and the Asia-Pacific regions. Dollar and Thrifty offer 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.
Competition
In the United States, in addition to local and regional vehicle rental companies, our principal car rental industry competitors are Avis Budget
Group, Inc., or “ABG,” which currently operates the Avis, Budget, ZipCar and Payless brands and Enterprise Holdings, which operates the
Enterprise Rent-A-Car Company, or "Enterprise," National Car Rental and Alamo brands.
In Europe, in addition to us, the principal pan-European participants in the car rental industry are ABG, operating the Avis and Budget
brands, and Europcar. Europcar also operates the National Car Rental and Alamo brands in the United Kingdom and Germany, and through
franchises in Spain, Italy and France. In certain European countries, there are also other companies and brands with substantial market
shares, including Sixt AG (operating the Sixt brand) in
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Source: HERTZ CORP, 10-K, March 31, 2014 Powered by Morningstar® Document Research℠
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