What is the condition for Budget's consent not to be unreasonably withheld regarding the sale, assignment, or transfer of the Budget license?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
Licensee agrees that this Agreement is personal to Licensee and Licensee hereby acknowledges the personal confidence Budget has in Licensee and/or the beneficial owners of Licensee as identified in Paragraph 12.5 and the Summary Pages (Section 6).
Neither this Agreement, the beneficial ownership of Licensee or the Rental Business (or any material assets relating to the Rental Business), or any licenses, concession agreements and/or permits which are required by, or related to, the Rental Business, may be voluntarily, involuntarily, directly or indirectly sold, assigned or otherwise transferred by Licensee (including by will, declaration of or transfer in trust or the laws of intestate succession or by operation of law through a divorce or other legal proceeding), without the prior written consent of Budget, which will not be unreasonably withheld in accordance with this Agreement and the transfer requirements prescribed by Budget from time to time, including payment of a transfer fee (see the "Transfer Requirements" contained in Exhibit F) and Licensee's execution of a general release of claims in a form satisfactory to Budget, except that such general release will exclude then- existing litigation between Licensee and Budget or the Related Entities and then-existing claims of Licensee against Budget or the Related Entities in the ordinary course of business under this Agreement or any other agreement between such parties, which litigation and claims will be identified in such release.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the agreement is personal to the licensee, acknowledging Budget's confidence in the licensee and/or the beneficial owners. Licensees cannot voluntarily or involuntarily sell, assign, or transfer the agreement, the beneficial ownership of the Licensee, or the Rental Business without Budget's prior written consent. However, Budget will not unreasonably withhold consent if the licensee adheres to the agreement's terms and the transfer requirements prescribed by Budget, including payment of a transfer fee and the execution of a general release of claims in a form satisfactory to Budget. The general release excludes then-existing litigation between the Licensee and Budget or related entities, and then-existing claims of the Licensee against Budget or related entities in the ordinary course of business under the agreement.
For a prospective Budget franchisee, this means that while you have the right to eventually sell your franchise, Budget retains significant control over who can become a new franchisee. This protects the brand by ensuring that new operators meet Budget's standards. However, Budget can't arbitrarily deny a transfer request; their decision must be reasonable and based on objective criteria.
It is important to note that the transfer process involves several steps and costs. The franchisee must pay a transfer fee and cover Budget's out-of-pocket expenses during the review process, which could total up to $10,000 ($2,500 transfer fee plus up to $7,500 in expenses). Additionally, the franchisee must resolve any outstanding financial obligations to Budget and other members of the network. The franchisee must also provide all necessary documentation to facilitate the transfer. Budget's approval process can take at least 90 days, and the transfer is contingent on Budget completing its review, waiving its right of first refusal, and issuing a Conditional Consent Letter.