Last Updated on January 4, 2022 by Chris
Think you’re renting from a giant corporation? Not necessarily. You might be picking up your vehicle from a car rental franchise. After all, many rental agencies operate much like fast food chains, contracting out their local operations.
As with fast food, a locally-owned operation isn’t necessarily a bad thing. McDonald’s tells its franchises exactly how to cook burgers and chicken nuggets. If there are standards, you have a consistent experience around the world, regardless of who actually owns the restaurant. In the same vein, renting from a local car 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 managed by the branded company that owns the location. An employee working for a corporate store answers to a series of local, regional, and national managers. Ultimately, his boss is the company president. The national corporation owns that office’s assets, including the fleet.
- A franchisee or licensee is an independent company that operates under the brand name. There are restrictions 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. The franchisee owns the property, and runs its own fleet. The franchisee also holds the leases or titles 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, hiring and training staff, and bringing the location into brand image and compliance standards. But the agency doesn’t own its 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?
For the customer, the distinction between corporate, franchisee, and agency primarilyaffects two situations: one-way rentals and customer service..
If you rent from a franchise, you may not be able to rent one-way. You can usually only return that vehicle back to an office owned by that franchisee. Typically, a franchisee owns a single branch, several branches within 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. The parent corporation has less oversight in how the franchise 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. 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. If you’re out of the pickup area, you’re still reliant on the company 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 may leave you on the hook for such things, or will leave you waiting for a long time for service to arrive.
The Upside of Corporate Locations
There’s much more flexibility on these issues when dealing with a corporate location. For one, most corporate operations share a floating fleet. That means that you can usually rent from any corporate location and return to any other corporate location, even on the opposite side of the country. This holds true if there are vehicle problem. 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.
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 getthe advantages of one-way or out-of-town service options. Agencieshire their own employees, but the parent rental corporation has a tighter grip on the agency’s operations and specific policies. The parent corporation handles any functions of a rental office where disputes tend to arise.
Which Car Rental Companies Have Franchises?
Enterprise Rent-a-Car owns its branches. When you rent from Enterprise, it will not be a car rental franchise.
All the other major rental companies operate at least some form of franchising. With these companies, most major airport locations are corporate-operated. A smaller neighborhood location is likely to be a car rental franchise.
Alamo Rent a Car and National typically operate franchises on the agency model.
Avis Budget Group
This 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, renters can drive cars one-way between any two Avis locations.
Budget Rent a Car, on the other hand, had rapid growth and pushed its franchise sales. Many Budgets around the country (including some major airports, such as Las Vegas) are franchises. 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 Global Holdings
Hertz is heavily corporate, but some Hertz Local Edition or small regional airport branches are franchises. However, Hertz operates a national floating fleet and permits one-ways between all Hertz locations.
Dollar Rent a Car and Thrifty Car Rental locations are mainly franchises. In other words, they do not operate any agency-type locations. Most major airport locations are corporate-owned, but some major airports (for example, Seattle and Salt Lake City) have franchises.