J.J. Brooksbank Co. v. Budget Rent-A-Car Corp.

Facts

In 1962, J.J. Brooksbank Company (hereinafter “Brooksbank”) (plaintiff) entered into a licensing agreement with Budget Rent-A-Car Corporation (hereinafter “Budget”) (defendant). Brooksbank, having entered into the agreement early in the history of the business, received an agreement that was more favorable than later licensees. In the beginning, Budget operated a telephone-based reservation system. Due to problems within the franchise system and an increase in the number of reservations, Budget transitioned to a central computerized reservation system. Following the transition to a new system, Brooksbank insisted that it should receive free reservations from any Budget reservation office under the parties’ 1962 licensing agreement. To avoid litigation over this issue, the parties entered into two agreements in 1970 and 1974. Under the 1970 and 1974 agreements, Budget would compensate Brooksbank for advertising and promotion expenditures in an amount approximating one-third of its costs relating to computerized reservations. But when the 1974 agreement expired, Budget refused to extend any more reservation cost reductions to Brooksbank. Budget alleged its obligation to give Brooksbank free reservations was no longer applicable given the new computerized system. As a result, Brooksbank brought a declaratory judgment action to determine its rights under the 1962 agreement. Budget argued that, given the transition to the computerized reservation system, it was excused from its obligations under the 1962 agreement.