Avis 2006 Annual Report Download - page 24

Table of Contents
with existing or future environmental laws and regulations may, however, require material expenditures by us or otherwise have a material
adverse effect on our consolidated financial position, results of operations or cash flows.
Changes in the U.S. and foreign legal and regulatory environment that affect our operations, including laws and regulations relating to the
insurance products we sell, consumer privacy, data security, automobile-related liability and insurance rates, could disrupt our business,
increase our expenses or otherwise have a material adverse effect on our results of operations.
We are subject to a wide variety of laws and regulations in the United States and the other countries and jurisdictions in which we operate, and
changes in the level of government regulation of our business have the potential to materially alter our business practices or our profitability.
Depending on the jurisdiction, those changes may come about through new legislation, the issuance of new laws and regulations or changes in
the interpretation of existing laws and regulations by a court, regulatory body or governmental official.
The optional insurance products, including, but not limited to, supplemental liability insurance, personal accident insurance and personal
effects protection, offered to renters providing various insurance coverages in our domestic vehicle rental operations are regulated under state
laws governing the licensing of such products. In our international car rental operations, our offering of optional products providing insurance
coverage historically has not been regulated.
Any changes in U.S. or foreign law that change our operating requirements with respect to optional insurance products could increase our costs
of compliance or make it uneconomical to offer such products, which would lead to a reduction in revenue. If customers decline to purchase
supplemental liability insurance products through us as a result of any changes in these laws or otherwise, our results of operations could be
materially adversely affected.
In almost every state, we recover various costs associated with the title and registration of our vehicles. In addition, where permitted, we also
recover the concession cost imposed by an airport authority or the owner and/or operator of the premises from which our vehicle is rented. Our
long standing business practice has been to separately state these additional surcharges in our rental agreements and invoices and disclose the
existence of these surcharges to consumers together with an estimated total price, inclusive of these surcharges, in all distribution channels.
This standard practice comports with the Federal Trade Commission Act and has been upheld by several courts. However, there are several
legislative proposals which, if enacted, would define which surcharges are permissible and establish calculation formulas which may differ
from the manner in which we set our surcharges. We cannot assure you that if any of these proposals were to be enacted there will not be an
adverse impact or limitation on our ability to recover all of the surcharges we currently charge.
We may be held responsible by third parties, regulators or courts for the actions of, or failures to act by, our licensees, which exposes us to
possible fines, other liabilities and bad publicity.
Our car and truck rental licensee locations, which include both franchisees and dealers, are independently owned and operated. Our agreements
with our licensees require that they comply with all laws and regulations applicable to their businesses, including our internal policies and
standards. Under these licensee agreements, licensees retain control over the employment and management of all personnel. Third parties,
regulators or courts may seek to hold us responsible for the actions of, or failures to act by, our licensees. Although we maintain the right to
monitor the operations of licensees and have the ability to terminate licensee agreements for failure to adhere to contracted operational
standards, we are unlikely to detect all problems. Moreover, there are occasions when our and our licensees’ activities may not be clearly
distinguishable. It is our policy to vigorously seek to be dismissed from any such claims and to pursue indemnity for any adverse decisions.
Failure to comply with laws and regulations by our licensees may expose us to liability and damages that may adversely affect our business.
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