car rental franchise

You've decided to rent a car from a big name brand for safety and consistency. But things are not always as they seem. Learn about the different types of car rental locations, and how this might affect your experience.

Think you're renting from a giant corporation? Not necessarily. Many rental agencies operate much like fast food chains, contracting out their local operations to local franchises.

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Like with fast food, a locally-owned operation isn't necessarily a bad thing. McDonald's tells their franchises exactly how to cook burgers and chicken nuggets and has standards so you have a consistent experience around the world, regardless of who owns the restaurant. In the same vein, renting a car from a local rental franchise should provide you with the same consistent experience nationwide.

The key word there is "should."

 

The Different Kinds of Car Rental Company Models

 

Local rental branches of the nine major brands usually fall into one of the following categories:

  • A corporate branch is run by the same company that owns the rights to the rental car brand. An employee working for a corporate store answers to a series of local, regional, and national managers and ultimately to the company president, and that office's assets (including its biggest asset—the fleet) are owned by the national corporation.
  • A franchisee or licensee is an independent company that has bought the right to use the brand of the parent corporation. With that right come restrictions on appearance and procedures as well as ongoing payment of fees to the brand owner. A franchisee or licensee is usually its own business that hires its own staff, owns its own property, and (most importantly) runs its own fleet. While it may work out a vehicle leasing/purchasing deal through the parent corporation, it holds the lease or title to its own cars.
  • An agency is often a hybrid of a corporate store and a franchise. An agency owner/operator is responsible for staking out a location and obtaining the real property (or lease agreement to work inside another property, such as a hotel), hiring and training staff, and bringing the location into brand image and compliance standards. There's one thing the agency doesn't own: the rental fleet. Instead, an agency relies on a pooled fleet owned by the parent corporation and receives a percentage of the revenue earned from each transaction.
 

Rental Car Corporation, Licensee or Agency: Why It Matters

 

For the customer, the distinction between corporate, franchisee, and agency primarily affects two situations: one-way rentals and customer service..

If you rent from a franchise, you are usually limited in your one-way rental options, You can usually only return that vehicle back to an office owned by that franchisee. Typically, a franchisee owns either a single branch, several branches in a city, or, at most, branches in a regional area.

Your customer service options may also be more limited in a few areas. For one, you're renting from an independent company, and there's only so much oversight the parent corporation has in how the business is run. Also, as a smaller business in a risky industry, a franchisee is more likely to look at decisions from a short-term financial standpoint rather than the overall customer service perspective of the national brand. This translates into potentially less forgiveness over seemingly minor revenue losses, whether it's additional fees, late charges, or vehicle damage.

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Also, if something happens to your vehicle, you're dealing with one owner/operator in one area. This means that if you're out of that area, you're still reliant on the company based back where you picked the vehicle up to provide you with service if something goes wrong. And with a small business operating on a slim profit margin, getting expedient and affordable assistance is not always possible. After all, the franchise owner is not going to want to cover an expensive tow bill back to his office. That means the policy that may leave you on the hook for such things, or will leave you waiting for a long time for service to arrive.

There's much more flexibility on these issues when dealing with a corporate location. For one, most corporate operations share a floating fleet, which means that you can usually rent from any corporate location and return to any other corporate location, even if it's on the opposite side of the country. This holds true when it comes to vehicle problems: with a floating fleet, it's easy to drive to the nearest corporate office and simply trade out your defective vehicle for a brand new one. If there's a tow involved, it'll likely take less time, and if for whatever reason (say, vehicle damage) you're on the hook for the tow, it's likely going to be shorter—and therefore cheaper.

From a personnel standpoint, corporate locations can afford to look at the big picture. They may be willing to take a small hit on waiving an extra fee or a late return surcharge in exchange for your satisfaction, even if you never plan on renting at that branch again. Corporate locations have more specific metrics that measure customer satisfaction, and employees and managers are a bit more accountable to individual complaints.

Agencies are a bit of a hybrid. With a national floating fleet, you'll still get the advantages of one-way or out-of-town service options. Agencies hire their own employees, but the parent rental corporation has a tighter grip on the agency's operations and specific policies. Many of the functions of a rental office where disputes tend to arise (such as damage claims and accounting practices) are handled by the parent rental corporation.

 

Which Car Rental Companies Are Franchised?

 

Enterprise Rent-a-Car branches are corporate-owned. Enterprise does not franchise.

All the other major rental companies operate at least some form of franchising. With these companies, most major airports are corporately owned and operated, while smaller (urban/suburban/rural) locations are typically independently run.

Alamo Rent a Car and National typically operate franchises on the agency model.

Avis Budget Group operates its three brands—Avis, Budget and Payless—separately as a holdover from the days before the merger and acquisition.

Avis focuses on consistency and service and made a conscious decision to retain control in the form of corporate locations and, as needed, smaller offices built on the agency model. With very few exceptions, every Avis location in the United States is either corporate or an agency. As such, cars can be driven one-way between any two Avis locations, or serviced at any other Avis location.

Budget Rent a Car, on the other hand, was built on the rapid-growth model and pushed its franchise sales, so many Budgets around the country (including some major airports, such as Las Vegas) are franchised. Since the merger, the Avis culture has taken hold, and many newer Budget operations have transitioned into agencies.

Payless Car Rental is a mixed bag. Payless operates with a hybrid model of corporately operated locations along with locations operated by franchisees.

Hertz is heavily corporate, but some Hertz Local Edition or small regional airport branches are operated independently. However, Hertz operates a national floating fleet and permits one-ways between all Hertz locations.

Dollar Rent a Car and Thrifty Car Rental are heavily franchised and do not operate any agency-type locations. While most major airports are corporately owned, franchises remain at some major airports (for example, Seattle and Salt Lake City).

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