You're getting ready to rent a car. You're going with a big name brand for safety—you find comfort in consistency.

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

But 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 the legal owner or tenant of the property you're standing in. 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".

Let's look at the different types of rental operations. Local rental branches of the eight 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 their biggest asset—their 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 a sort of cross between 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.

So, What Does This Mean?

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

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 small regional area (such as a part of a state).

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 franchise owner 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.

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 happens. 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 cough up for a thousand dollar tow bill back to his office—so that means policies 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 works, too, 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 in that city 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 having one-way or out-of-town service options available. Agencies still employ their own employees, but the parent rental corporation has a bit of a tighter grip on the agency's operations and specific policies, and 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.

So, Who's Who?

All Enterprise branches are corporate-owned. Enterprise does not franchise. However, Enterprise typically does not offer one-way rentals today.

All of the rest of the 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 usually independently run.

Alamo and National typically operate franchises on the agency model. Enterprise recently purchased Vanguard Car Rental, which operated the Alamo and National brands. Consistent with Enterprise's corporate philosophy, they are in the process of purchasing all existing Alamo and National franchises and agencies and integrating them in to Enterprise's fully corporate system. This will take some time—likely several years—to complete, so look for smaller Alamo and National operations to be independently run for the time being.

Avis Budget Group operates its two brands in a different fashion as a holdover from the days before they merged. Avis wanted to focus 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, very few exceptions, every Avis in the United States is either corporate or agency, and as such, cars can be one-wayed between any two Avis locations, or serviced at any other Avis location. Budget, 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 are actually agencies.

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 and Thrifty 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). Additionally, Dollar Thrifty is currently refranchising some of its smaller corporate stores, a trend that began with the new President and CEO and is likely to continue for some time.

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