Avis 2009 Annual Report Download - page 29

Table of Contents
We may be held responsible by third parties, regulators or courts for the actions of, or failures to act by, our licensees, dealers or independent
operators, which exposes us to possible fines, other liabilities and negative publicity.
Our car and truck rental franchisee and dealer locations are independently owned and operated. We also operate many of our corporate locations
through agreements with “agency operators,” which are third-party independent contractors who receive commissions to operate such locations.
Our agreements with our franchisees, dealers and agency operators require that they comply with all laws and regulations applicable to their
businesses, including our internal policies and standards. Under these agreements, our franchisees, dealers and agency operators 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 franchisees, dealers or agency operators. Although we actively monitor the operations of these franchisees, dealers and
agency operators, and under certain circumstances have the ability to terminate their agreements for failure to adhere to contracted operational
standards, we are unlikely to detect all problems. Moreover, there are occasions when the actions and activities of our franchisees, dealers or
agency operators may not be clearly distinguishable from our own. It is our policy to vigorously seek to be dismissed from any such claims and
to pursue indemnity for any adverse outcomes. Failure of our franchisees, dealers or agency operators to comply with laws and regulations may
expose us to liability, damages and publicity that may adversely affect our business.
Any failure by us to protect confidential information of our customers against security breaches could damage our reputation and
substantially harm our business and results of operations.
Third parties may have the technology or expertise to breach the security of our customer transaction data. Our security measures may not
prevent security breaches that could result in substantial harm to our business and results of operations and damage to our reputation. We rely on
encryption and/or authentication technology licensed from third parties to effect secure transmission of confidential information, including credit
card numbers. Advances in computer capabilities, new discoveries in the field of cryptography, or other developments may result in a
compromise or breach of the technology we use to protect customer transaction data. In addition, anyone who is able to circumvent our security
measures could misappropriate proprietary information or cause interruptions in our operations. Any such compromise of our security could
damage our reputation and brand and expose us to a risk of loss or litigation and possible liability, which would substantially harm our business
and results of operations.
In addition, the Payment Card Industry (PCI) imposes strict customer credit card data security standards to ensure that our customers’
credit card
information is protected. Failure to meet the PCI data security standards could result in substantial increased fees to credit card companies, other
liabilities and/or loss of the right to collect credit card payments, which would materially impact operations. Failure to protect customer credit
card and other information can also result in governmental investigations or material civil or criminal liability.
Significant increases in fuel costs or reduced supplies of fuel could harm our business.
Significant increases in fuel prices, a severe or protracted disruption in fuel supplies or imposition of mandatory allocations or rationing of fuel,
could negatively impact our car rental business by discouraging consumers from renting cars or disrupting air travel, on which a significant
portion of our car rental business relies, and therefore could have an adverse effect on our financial condition and results of operations.
We face risks associated with our like-kind-exchange program.
We utilize a like-kind exchange program whereby we replace vehicles in a manner that allows tax gains on disposed vehicles to be deferred. The
program has resulted in a material deferral of federal and state income taxes beginning in 2004. The benefit of deferral is dependent on
reinvestment of vehicle disposition proceeds in replacement vehicles within a prescribed period of time (usually six months). The decline in
2009 of our average
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