<PAGE>
 
                                                                   EXHIBIT 10.15

                                XTRA CORPORATION
                              Severance Agreement
                              -------------------


    AGREEMENT, made this 8th day of December, 1997, by and between William H.
Franz ("Executive") and XTRA Corporation (the "Company").

                                   WITNESSETH

    Executive is a key executive of the Company or one of its subsidiaries,
responsible, in part, for the policy-making functions of the Company and the
overall viability of the Company's business; and

     The Company recognizes that the possibility that certain significant
transactions involving the Company may result in the departure or distraction of
management to the detriment of the Company and its shareholders, and

    The Company wishes to assure Executive of fair severance should his
employment terminate in specified circumstances following the consummation of
certain significant transactions involving the Company and to assure Executive
of certain other benefits in the event of such transactions.

    NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:

1.  If, within the 24-month period (the "Post Significant Transaction Period")
    beginning on the date of a Significant Transaction (as defined in Exhibit A
    attached hereto and made a part hereof), (i) Executive's employment with the
    company is terminated (i) by the Company for any reason other than for
    "Cause" (as defined in paragraph 2 below), or (ii) Executive terminates such
    employment for Good Reason (as defined in paragraph 4 below):

    a.  The Company will pay to Executive within five (5) business days of such
        termination of employment a lump-sum cash payment equal to the sum of
        (i) the Executive's annual base salary ("Annual Base Salary") through
        the date of such termination of employment, and any earned bonuses for
        any completed fiscal period, to the extent not theretofore paid, (ii) a
        prorated portion (the "Prorated Bonus Amount") of the award payable
        under the Company's Economic Profit Incentive Plan, or any comparable or
        successor annual plan or plans in which the Executive is then a
        participant (the "Cash Plan"), notwithstanding anything to the contrary
        in the Cash Plan, determined by calculating the product of (A) the bonus
        payable with respect to the award for the fiscal period in which the
        date of termination occurs under the Cash Plan annualizing the Company's
<PAGE>
 
        performance under the plan up to the date of termination by dividing the
        Company's performance to the date of termination by the number of full
        months in the performance period through the date of termination and
        multiplying the result by 12, times (B) a fraction, the numerator of
        which is the number of full months in the current fiscal year through
        the date of termination of employment, and the denominator of which is
        12, and (iii) any compensation, including compensation for the fiscal
        year in which the date of termination occurs, previously deferred by the
        Executive (together with any accrued interest or earnings thereon) and
        any accrued vacation pay, in each case to the extent not theretofore
        paid (the sum of the amounts described in the above subsections (i)
        through (iii) shall be hereinafter referred to as the "Accrued
        Obligations"); and

    b.  any stock, stock option or cash awards granted to the Executive by the
        Company, including any awards under the Company's 1987 Stock Incentive
        Plan (or any successor plan), that would have become vested and
        exercisable had the Executive continued to be employed by the Company
        shall immediately vest and become exercisable in full notwithstanding
        any provision to the contrary of such grant and shall remain exercisable
        until the later of (i) the latest date on which such grant could have
        been exercised had the Executive remained employed by the Company, and
        (ii) the date upon which any period during which the Executive has
        agreed not to sell the type of securities that may be issuable to such
        Executive upon the exercise of such grant shall expire; and

    c.  the Company will pay to Executive within five (5) business days of such
        termination of employment a lump-sum cash payment equal to two times the
        sum of:  (A) the amount of the Executive's Annual Base Salary at the
        rate in effect immediately prior to the date of termination, and (B) the
        Average Annualized Bonus Amount which shall be calculated by multiplying
        by 12 the quotient determined by dividing (i) the sum of the actual cash
        bonus earned by the Executive during each of the two fiscal years
        immediately preceding the date of termination, plus the Prorated Bonus
        Amount, by (ii)  24 plus the number of full months in the period for
        which the Prorated Bonus Payment is calculated; and

    d.  the Company will pay to Executive within five (5) business days of such
        termination of employment a lump-sum cash payment equal to the amount of
        the forfeitable portion of the Executive's accrued benefit under the
        Company's qualified 401(k) or other qualified retirement plans; and

    e.  Executive, together with his dependents, will continue following such
        termination of employment to participate fully at the Company's expense
        (subject to any required employee contributions at the rate in effect
        immediately prior to the date of the Significant Transaction) in all
        welfare benefit plans (other than disability insurance), programs,
        practices and policies maintained or sponsored by the Company
        immediately prior to the Significant Transaction, or 
<PAGE>
 
        receive substantially the equivalent coverage (or the full value thereof
        in cash) from the Company, until the second anniversary of such
        termination or such longer period as may be provided by the terms of the
        appropriate plan, program, practice or policy, provided, however, that
        if the Executive becomes re-employed with another employer and is
        eligible to receive reasonably comparable medical or other welfare
        benefits under another employer provided plan, the Company's obligation
        to provide the medical and other welfare benefits described herein shall
        cease; and provided further that if Executive's continued participation
        is not possible under the terms of such Company plans and programs, the
        Company shall instead either arrange to provide Executive with
        substantially similar benefits upon comparable terms or pay to the
        Executive (within five (5) business days of the date of termination) an
        amount equal to the full value thereof in cash; and

    f.  to the extent not theretofore paid or provided for, the Company shall
        timely pay or provide to the Executive any other amounts or benefits
        required to be paid or provided or which the Executive is eligible to
        receive under any plan, program, policy, practice, contract or agreement
        of the Company ("Other Benefits").

      Notwithstanding anything herein to the contrary, to the extent that any
    payment or benefit provided for herein is required to be paid or vested on
    any earlier date under the terms of any plan, agreement or arrangements,
    such plan, agreement or arrangement shall control.  Further, notwithstanding
    anything herein to the contrary, if a Significant Transaction occurs and if
    the Executive's employment with the Company is terminated by the Company for
    a reason other than Cause prior to the date upon which the Significant
    Transaction occurs, and if it can be reasonably demonstrated by the
    Executive that such termination of employment (i) was at the request of a
    third party who has taken steps reasonably calculated to effect a
    Significant Transaction or (ii) otherwise arose in connection with or in
    anticipation of a Significant Transaction, then for all purposes of this
    Agreement, Executive shall be entitled to the benefits provided in Sections
    1(a)-(f) above.


2.  Cause, Other Than For Good Reason; Disability.
    --------------------------------------------- 

    a.  Cause; Other Than for Good Reason.  If the Executive's employment shall
        ---------------------------------                                      
        be terminated for Cause (as defined in Section 3 below), or if the
        Executive voluntarily terminates employment, excluding a termination for
        Good Reason, during the Post Significant Transaction Period, this
        Agreement shall terminate without further obligations to the Executive
        other than the obligation to pay the Executive (A) his Annual Base
        Salary through the date of termination, (B) the amount of any
        compensation previously deferred by the Executive, and (C) Other
        Benefits, in each case to the extent theretofore unpaid.
<PAGE>
 
    b.  Disability. If the Executive's employment is terminated during the Post
        ----------                                                             
        Significant Transaction Period by reason of the Executive's Disability,
        this Agreement shall terminate without further obligations to the
        Executive other than for payment of Accrued Obligations and the timely
        payment or provision of Other Benefits.  Accrued Obligations shall be
        paid to the Executive in a lump sum in cash within five (5) business
        days of the date of termination of employment.  For purposes of this
        Agreement, "Disability" shall mean the absence of the Executive from the
        Executive's duties with the Company on a full-time basis for 180
        consecutive business days as a result of incapacity due to mental or
        physical illness which is determined to be total and permanent by a
        physician selected by the Company or its insurers and reasonably
        acceptable to the Executive or the Executive's legal representative.  If
        the Company determines in good faith that the Disability of the
        Executive has occurred during the Post Significant Transaction Period,
        it may give the Executive written notice of its intention to terminate
        the Executive's employment.  In such event, the Executive's employment
        with the Company shall terminate effective on the 30th day after receipt
        of such notice by the Executive, provided that, within the 30 days of
        such receipt, the Executive shall not have returned to full-time
        performance of the Executive's duties.

    In the case of (a) or (b) above, all obligations shall be paid to the
    Executive in a lump sum in cash within five (5) business days of date of the
    termination of employment or such earlier time as may be required under law.

3.  "Cause" means only: (a) commission of a felony or gross neglect of duty by
    the Executive which is intended to result in substantial personal enrichment
    of the Executive at the expense of the Company, (b) conviction of, or plea
    of nolo contendere to, a crime involving moral turpitude, or (c) gross
    neglect by the Executive in the performance of his duties to the Company
    which results in material injury to the Company, and continues for more than
    30 days after written notice given to the Executive pursuant to a two-thirds
    vote of all of the members of the Board at a meeting called and held for
    such purpose (after reasonable notice to Executive) and at which meeting the
    Executive and his counsel were given an opportunity to be heard, such vote
    to set forth in reasonable detail the nature of the failure.  For purposes
    of this definition of Cause, no act or omission shall be considered to have
    been "willful" unless it was not in good faith and the Executive had
    knowledge at the time that the act or omission was not in the best interest
    of the Company.  Any act, or failure to act, based on authority given
    pursuant to a resolution duly adopted by the Board or upon the instructions
    of the Chief Executive Officer or another senior officer of the Company or
    based on the advice of counsel of the Company shall be conclusively presumed
    to be done, or omitted to be done, by the Executive in good faith and in the
    best interest of the Company.

4.  Executive shall be deemed to have voluntarily terminated his employment for
    Good Reason if the Executive leaves the employ of the Company for any reason
    following:
<PAGE>
 
    a.  Any action by the Company which results in a material diminution in
        Executive's position, authority, duties or responsibilities, excluding
        for this purpose an isolated, insubstantial and inadvertent action not
        taken in bad faith and which is remedied by the Company promptly after
        receipt of notice thereof given by the Executive; provided, however, a
        sale or transfer of some or all of the business of the Company or any of
        its subsidiaries or other reduction in its business or that of its
        subsidiaries, or the fact that the Company shall become a subsidiary of
        another company or the securities of the Company shall no longer be
        publicly traded, shall not constitute "Good Reason" hereunder;

    b.  Any reduction in the Executive's rate of Annual Base Salary for any
        fiscal year to less than 100% of the rate of Annual Base Salary payable
        for the completed fiscal year immediately preceding the Significant
        Transaction; or

    c.  Failure of the Company to permit the Executive to participate in all
        incentive, retirement, and savings policies and programs, and all
        welfare benefit plans, practices and programs (including without
        limitation, life, accidental death and travel accident  insurance,
        medical insurance, dental insurance or disability plans) to the extent
        applicable generally at the time to other peer executives of the Company
        and its affiliated companies, other than an isolated, insubstantial and
        inadvertent failure not occurring in bad faith and which is remedied by
        the Company promptly after receipt of notice thereof given by the
        Executive; or

    d.  The Company requires Executive to be based at any office or location
        further than 50 miles from St. Louis, Missouri; or

    e.  Any failure by the Company to comply with and satisfy Section 7 of this
        Agreement.

5.  Coordination With Parachute Tax Rules.  Payments under Section 1 shall be
    -------------------------------------                                    
    made without regard to whether the deductibility of such payments (or any
    other payments to or for the benefit of Executive) would be limited or
    precluded by Internal Revenue Code Section 280G and without regard to
    whether such payments (or any other payments) would subject Executive to the
    federal excise tax levied on certain "excess parachute payments" under
    Internal Revenue Code Section 4999; provided, that if the total of all
                                        --------                          
    payments to or for the benefit of Executive, after reduction for all federal
    taxes (including the tax described in Internal Revenue Code Section 4999, if
    applicable) with respect to such payments ("Executive's total after-tax
    payments"), would be increased by the limitation or elimination of any
    payment under Section 1, amounts payable under Section 1 shall be reduced to
    the extent, and only to the extent, necessary to maximize Executive's total
    after-tax payments.  The determination as to whether and to what extent
    payments under Section 1 are required to be reduced in accordance with the
    preceding sentence shall be made at the Company's expense by Arthur Andersen
    LLP or by such other certified public accounting firm, law firm or benefits
    consulting firm as the Compensation Committee of the Company's Board of
    Directors may designate prior to a 

 
<PAGE>
 
    Change of Control. In the event of any underpayment or overpayment under
    Section 1 as determined by Arthur Andersen LLP (or such other firm as may
    have been designated in accordance with the preceding sentence), the amount
    of such underpayment or overpayment shall forthwith be paid to Executive or
    refunded to the Company, as the case may be, with interest at the applicable
    Federal rate provided for in Section 7872(f)(2) of the Internal Revenue
    Code.

6.  The Company agrees (i) to promptly reimburse Executive for any and all legal
    fees and related expenses (including, without limitation, stenographer fees,
    printing costs, etc.) incurred by him to enforce the provisions of this
    Agreement or in contesting or disputing that the termination of his
    employment is for Cause or other than for Good Reason (regardless of the
    outcome thereof), (ii) to pay the cost of such judicial proceeding, and
    (iii) to pay interest to Executive on all amounts owed to Executive under
    this Agreement during any period of time that such amounts are withheld
    pending judicial proceedings (such interest will be at the base rate as
    published from time to time in the eastern edition of the Wall Street
    Journal); provided, however, that the Company shall not be required to
    reimburse the Executive for such fees, costs and expenses, if a court of
    competent jurisdiction shall issue a final order to the effect that the
    Executive shall not prevail on any claim relating to this Agreement.

7.  If the Company is at any time before, after or in connection with, a
    Significant Transaction merged or consolidated into or with any other
    corporation or other entity (whether or not the Company is the surviving
    entity), or if substantially all of the assets thereof are transferred to
    another corporation or other entity, the provisions of this Agreement will
    be binding upon and inure to the benefit of the corporation or other entity
    resulting from such merger or consolidation or the acquirer of such assets
    (the "Successor Entity"), and this paragraph 7 will apply in the event of
    any subsequent merger or consolidation or transfer of assets.  The Company
    will require any such Successor Entity to assume expressly and agree to
    perform this Agreement in the same manner and to the same extent that the
    Company would be required to perform.  As used in this Agreement, "Company"
    shall mean the Company as hereinbefore defined and any Successor Entity
    which assumes and agrees to perform this Agreement by operation of law or
    otherwise.

    In the event of any merger, consolidation, or sale of assets described
    above, nothing contained in this Agreement will detract from or otherwise
    limit Executive's right to or privilege of participation in any stock option
    or purchase plan or any bonus, profit sharing, pension, group insurance,
    hospitalization, or other incentive or benefit plan or arrangement which may
    be or become applicable to executives of the entity resulting from such
    merger or consolidation or the entity acquiring such assets of the Company.

    In the event of any merger, consolidation, or sale of assets described
    above, references to the Company in this Agreement shall unless the context
    suggests otherwise be deemed to include the entity resulting from such
    merger or consolidation or the acquirer of such assets of the Company.
<PAGE>
 
8.  Any termination by the Company for Cause, or by the Executive for Good
    Reason, shall be communicated by Notice of Termination to the other party
    hereto given in accordance with the last paragraph of Section 13 of this
    Agreement.  For purposes of this Agreement, a "Notice of Termination" means
    a written notice which (i) indicates the specific termination provision in
    this Agreement relied upon, (ii) to the extent applicable, sets forth in
    reasonable detail the facts and circumstances claimed to provide a basis for
    termination of the Executive's employment under the provision so indicated
    and (iii) if the Date of Termination (as defined below) is other than the
    date of receipt of such notice, specifies the termination date (which date
    shall be not more than thirty days after the giving of such notice).  The
    failure by the Executive or the Company to set forth in the Notice of
    Termination any fact or circumstance which contributes to a showing of Good
    Reason or Cause shall not waive any right of the Executive or the Company,
    respectively, hereunder or preclude the Executive or the Company,
    respectively, from asserting such fact or circumstance in enforcing the
    Executive's or the Company's rights hereunder.

    "Date of Termination" means (i) if the Executive's employment is terminated
    by the Company for Cause, or by the Executive for Good Reason, the date of
    receipt of the Notice of Termination or any later date specified therein, as
    the case may be, and (ii) if the Executive's employment is terminated by the
    Company other than for Cause, the Date of Termination shall be the date on
    which the Company notifies the Executive of such termination.

9.  All payments required to be made by the Company hereunder to, or on behalf
    of, Executive or his dependents, beneficiaries, or estate will be subject to
    the withholding of such amounts relating to tax and/or other payroll
    deductions as may be required by law.

10. There shall be no requirement on the part of the Executive to seek other
    employment or otherwise mitigate damages in order to be entitled to the full
    amount of any payments and benefits to which Executive is entitled under
    this Agreement, and the amount of such payments and benefits shall not be
    reduced by any compensation or benefits received by Executive from other
    employment, other than with respect to certain welfare benefits as provided
    in the proviso to Section 1(e).

11. Nothing contained in this Agreement shall be construed as a contract of
    employment between the Company and the Executive, or as a right of the
    Executive to continue in the employ of the Company, or as a limitation of
    the right of the Company to discharge the Executive with or without Cause;
    provided that the Executive shall have the right to receive upon termination
    of his employment the payments and benefits provided in this Agreement and
    shall not be deemed to have waived any rights he may have either at law or
    in equity in respect of such discharge.

12. No amendment, change, or modification of this Agreement may be made except
    in writing, signed by both parties.
<PAGE>
 
13. This Agreement shall terminate on the third anniversary of the date hereof,
    provided, however, that commencing on the date one year after the date
    hereof, and on each annual anniversary of such date (each such date
    hereinafter referred to as a "Renewal Date"), unless previously terminated,
    the term of this Agreement shall be automatically extended so as to
    terminate three years from such Renewal Date, unless at least sixty days
    prior to the Renewal Date the Company shall give notice to the Executive
    that the term of this Agreement shall not be so extended.  This Agreement
    shall not apply to a Significant Transaction which takes place after the
    termination of this Agreement.

    Payments made by the Company pursuant to this Agreement shall be in lieu of
    severance payments, if any, which might otherwise be available to Executive
    under any severance plan, policy, program or arrangement generally
    applicable to the employees of the Company.  If for any reason Executive
    receives severance payments (other than under this Agreement) upon the
    termination of his employment with the Company, the amount of such payments
    shall be deducted from the amount paid under this Agreement.  The purpose of
    this provision is solely to avert a duplication of benefits; neither this
    provision nor the provisions of any other agreement shall be interpreted to
    reduce the amount payable to Executive below the amount that would otherwise
    have been payable under this Agreement.

    The provisions of this Agreement shall be binding upon and shall inure to
    the benefit of Executive, his executors, administrators, legal
    representatives, and assigns, and the Company and its successors.

    The validity, interpretation, and effect of this Agreement shall be governed
    by the laws of The Commonwealth of Massachusetts.

    The invalidity or unenforceability of any provisions of this Agreement shall
    not affect the validity or enforceability of any other provision of this
    Agreement, which shall remain in full force and effect.

    The Company shall have no right of set-off or counterclaims, in respect of
    any claim, debt, or obligation, against any payments to Executive, his
    dependents, beneficiaries, or estate provided for in this Agreement.

    No right or interest to or in any payments shall be assignable by the
    Executive. No right, benefit, or interest hereunder, shall be subject to
    anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
    hypothecation, or set-off in respect of any claim, debt, or obligation, or
    to execution, attachment, levy, or similar process, or assignment by
    operation of law.  Any attempt, voluntary or involuntary, to effect any
    action specified in the immediately preceding sentence shall, to the full
    extent permitted by law, be null, void, and of no effect.
<PAGE>
 
    All notices and other communications hereunder shall be in writing and shall
    be given by hand delivery to the other party or by registered or certified
    mail, return receipt requested, postage prepaid, addressed as follows:


         If to the Executive:  William H. Franz
         -------------------   16418 Wilson Farm Drive                          
                               Chesterfield, Missouri  63005 
                  
         
         If to the Company:    XTRA Corporation
         -----------------     60 State Street - 11th Floor     
                               Boston, Massachusetts 02109             
                               Attn: Chair, Compensation Committee, and
                                     the General Counsel             
                  


    or to such other address as either party shall have furnished to the other
    in writing in accordance herewith.  Notice and communications shall be
    effective either on the date of delivery (in the case of delivery by hand),
    or three business days after deposit into the mails (in the case of delivery
    by mail).
<PAGE>
 
    IN WITNESS WHEREOF, XTRA Corporation and Executive have each caused this
Agreement to be duly executed and delivered as of the date set forth above.

                         XTRA CORPORATION

                              
                         By:    /s/ Martin L. Solomon 
                            -----------------------------------
                              Name:  Martin L. Solomon
                              Title:    Chair, Compensation Committee

                                /s/ William H. Franz
                         --------------------------------------
                             William H. Franz
<PAGE>
 
                                   EXHIBIT A

    Significant Transaction.  For the purposes of this Agreement, a "Significant
    -----------------------                                                     
Transaction" shall mean:

    a.  Consummation of a reorganization, merger or consolidation or sale or
        other disposition of all or substantially all of the assets of the
        Company, or XTRA Lease, Inc., in one or a series of transactions (but
        excluding any reorganization, merger or consolidation or sale of assets
        with or to the Company or any subsidiary of the Company, unless in
        connection with such transaction there is also a Significant Transaction
        involving the Company) (a "Business Combination"), in each case unless,
        following such Business Combination, (i) all or substantially all of the
        individuals and entities who were the beneficial owners, respectively,
        of the then outstanding shares of common stock of  the Company (the
        "Company Common Stock") and the then outstanding voting securities of
        the Company entitled to vote generally in the election of directors (the
        "Outstanding Company Voting Securities" immediately prior to such
        Business Combination beneficially own, directly or indirectly, more than
        50% of, respectively, the then outstanding shares of common stock and
        the combined voting power of the then outstanding voting securities
        entitled to vote generally in the election of directors, as the case may
        be, of the corporation resulting from such Business Combination
        (including, without limitation, a corporation which as a result of such
        transaction owns the Company or all or substantially all of the
        Company's assets either directly or through one or more subsidiaries) in
        substantially the same proportions as their ownership, immediately prior
        to such Business Combination of the Outstanding Company Common Stock and
        outstanding Company Voting Securities, as the case may be, (ii) no
        individual, corporation, partnership, limited liability company, or
        other entity, which term shall include a "group" (within the meaning of
        section 13(d) of the Securities Exchange Act of 1934 (the "Act"),
        excluding any employee benefit plan (or related trust) of the Company or
        such corporation resulting from such Business Combination, beneficially
        owns, directly or indirectly, 30% or more of, respectively, the then
        outstanding shares of common stock of the corporation resulting from
        such Business Combination or the combined voting power of the then
        outstanding voting securities of such corporation except to the extent
        that such ownership existed prior to the Business Combination and (iii)
        at least a majority of the members of the board of directors of the
        corporation resulting from such Business Combination were members of the
        Incumbent Board at the time of the execution of the initial agreement,
        or of the action of the Board, providing for such Business Combination;
        or

    b.  Approval by the shareholders of the Company of a complete liquidation or
        dissolution of the Company or XTRA Lease, Inc., other than a liquidation
        or dissolution of XTRA Lease, Inc. into the Company or any subsidiary of
        the Company.