What aspects of the Transferee's financial strength and credit history does Budget consider during the transfer approval process?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
In determining whether to approve the transfer, Budget shall consider each of the following:
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- The financial strength and credit history of the Transferee, its shareholders and/or partners.
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- The capitalization and available working capital of the Transferee, and proposed capitalization of the Rental Business.
Transferring Licensee will submit to Budget written notice of its intent to transfer, together with all of the following documents and information for Budget's review, with such documents and information being certified as true, correct and complete by Transferee, its shareholders, members and/or partner(s):
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- The names, addresses and phone numbers (both business and personal) of the Transferee, its shareholders, members and/or partners, and its officers, directors and operational management personnel (hereinafter "management team") related to the Rental Business.
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- Financial statements of the Transferee, its shareholders, members and/or partners for the past three (3) years and an opening balance sheet for the Rental Business.
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- The bankruptcy and litigation history, for the past five (5) years, of the Transferee, its shareholders and/or partners and its management team.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, when a franchisee seeks to transfer their license to a new owner (the Transferee), Budget assesses the Transferee's financial viability. Specifically, Budget will consider the financial strength and credit history of the Transferee, including its shareholders and/or partners. Budget also evaluates the capitalization and available working capital of the Transferee, along with the proposed capitalization of the rental business itself.
To facilitate this review, Budget requires the Transferring Licensee to submit various documents. These include the names, addresses, and phone numbers of the Transferee, its shareholders, members, partners, officers, directors, and operational management personnel. Additionally, the Transferring Licensee must provide financial statements of the Transferee, its shareholders, members, and partners for the past three years, as well as an opening balance sheet for the rental business. The bankruptcy and litigation history for the past five years of the Transferee, its shareholders and/or partners and its management team must also be submitted.
This thorough evaluation ensures that the proposed Transferee has the financial resources and stability to successfully operate the Budget franchise. By scrutinizing the Transferee's financial background, Budget aims to protect its brand and the interests of its existing franchisees. Prospective franchisees should be prepared to provide comprehensive financial documentation and be aware that their financial history will be a significant factor in the transfer approval process.