What conditions govern the sale, assignment, and transfer of the Budget license by the licensee, as described in Article XII?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
territory or offer vehicle rental services in the converted market(s), and Budget or any of its Related Entities may in its sole discretion, own and operate, or license others to establish, new locations and/or offer such services, including through Rental Businesses in the converted territory or converted market.
11.12 Budget Truck Business. Licensee agrees that it has no rights under this Agreement to rent or lease any motor vehicles that are designed, used or maintained for the transportation of property or goods (collectively defined as "Trucks"). Budget has the right to conduct its Truck business, at its sole discretion, inside the Territory.
SALE, ASSIGNMENT, AND TRANSFER
12.1 By Budget. This Agreement will be fully transferable and assignable by Budget and will inure to the benefit of any assignee, transferee or other legal successor to the interest of Budget herein.
12.2 By Licensee.
- (a) By Licensee. 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. Any such attempted or purported sale, assignment or transfer contrary to the terms and conditions of this Agreement or the Transfer Requirements will constitute a breach hereof and be void.
- (b) Meaning of Assignment or Transfer Requiring Approval. Sale, assignment or transfer of Licensee, the Rental Business, or the beneficial ownership of Licensee requiring the consent of Budget will include: (i) a sale, assignment or transfer, or cumulative sales, assignments or transfers, lifetime and testamentary, at any time during the term of this Agreement, of twenty-five percent (25%) or more of the equity ownership, or a lesser percentage if such transfer would change the voting control of Licensee or the Rental Business, whether in the form of common or preferred stock or any security convertible thereto or partnership or proprietorship interest; provided that, notwithstanding anything in this Agreement to the contrary, dispositions by a beneficial owner by will or intestacy or by gifts, sales or otherwise to the spouse or children of such beneficial owner or to other then-current beneficial owners of Licensee or their respective spouses or children (a "Permitted Transferee") will not be deemed
a sale, assignment or transfer giving rise to Budget's need to consent thereto so long as Licensee gives prior written notice of any such disposition to Budget.
(c) Notice of Any Sale, Assignment, or Transfer. Notwithstanding the foregoing, Licensee will provide to Budget prior written notice of any proposed sales, assignments or transfers constituting any change in the equity ownership or control of Licensee or the Rental Business. Furthermore, Licensee will maintain stop-transfer instructions against the transfer on its records of any equity securities of Licensee; and all certificates evidencing ownership of equity securities will have the following legend printed legibly and conspicuously on their face:
"Transfer of these shares is restricted by an Budget Rent A Car System License Agreement with Budget Rent A Car System, Inc."
- (d) No Public Offering. Licensee covenants not to be or become, a public company directly or indirectly including, by way of an initial public offering or transfer to or merger with an existing public company. Accordingly, securities of Licensee or an entity owning a direct or indirect equity interest in Licensee, this Agreement, any of Licensee's assets or any of the Rental Business Locations may not be offered pursuant to a public offering or merged with an existing public company.
- (e) Limitations on Private Offerings. Licensee acknowledges and understands that Budget may not consent to Licensee's private offering if Budget determines, in its sole discretion, that such an offering is not in the best interest of Budget or its franchise system. If Budget allows a private offering, Licensee will need to pay a higher transfer fee, as reasonably determined by Budget, and meet the other Transfer Requirements contained in Exhibit F.
- (f) Owner List. Licensee will maintain a current list of all owners of record and all beneficial owners of any class of voting securities or securities convertible into voting securities of Licensee and will furnish the list to Budget upon execution of this Agreement, within ten (10) days of any change, and at any other reasonable times upon Budget's request.
- 12.3 Budget's Right of First Refusal. If Licensee or its beneficial owners propose to sell, assign or transfer this Agreement, the beneficial ownership of Licensee or the Rental Business (or any material assets relating to the Rental Business) as hereinbefore set forth in Paragraph 12.2(b) (other than to a Permitted Transferee), a copy of the agreement to sell, assign or transfer will be in writing and executed by all parties and submitted to Budget along with all information in Licensee's or the transferee's possession concerning the proposed buyer. Budget or its designee (hereinafter also referred to as "Budget" for purposes of this Paragraph 12.3) will, for a period of sixty (60) days from the date of its receipt thereof, have the option to purchase same for the price and on the terms and conditions contained in such agreement, provided that Budget may substitute cash for any other consideration proposed in such agreement and will in all cases be entitled to customary representations and warranties in connection with any such purchase. If the proposed sale, assignment or transfer includes assets of Licensee not related to the Rental Business, Budget, at its sole option, may purchase only the assets related to the operation of the Rental Business, or may also purchase all or some of the other assets, with an equitable purchase price to be allocated to each asset, not a part of the Rental Business. Budget may elect to close any purchase through
an escrow in accordance with terms and conditions reasonably prescribed by Budget. If Budget does not exercise this option, the Licensee and/or its beneficial owners, subject to approval by Budget as provided in Paragraph 12.2(a), Exhibit F and any applicable franchise disclosure requirements may proceed with the sale, assignment or transfer.
- 12.4 Death or Incapacity of Licensee.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the license agreement is personal to the licensee, acknowledging Budget's confidence in the licensee and beneficial owners. As such, the licensee cannot sell, assign, or transfer the agreement, beneficial ownership, rental business, or associated licenses without Budget's prior written consent, which will not be unreasonably withheld. This includes transfers by will, trust, intestate succession, or legal proceedings like divorce. Any attempt to transfer without consent is a breach of the agreement and will be void.
Sale, assignment, or transfer requiring Budget's approval includes any transfer of 25% or more of the equity ownership, or a lesser percentage if it changes voting control. Dispositions to a spouse, children, or other current beneficial owners (or their spouses/children) are permitted if Budget receives prior written notice. Licensees must provide prior written notice of any proposed changes in equity ownership or control and maintain stop-transfer instructions on their equity securities, with a legend printed on all certificates indicating transfer restrictions. Licensees are prohibited from becoming a public company.
Budget has the option to purchase the license if the licensee intends to sell, assign, or transfer it. Budget has 60 days from receiving notice to exercise this option, under the same terms as the proposed agreement, substituting cash if necessary, and with customary representations and warranties. If the sale includes assets unrelated to the rental business, Budget can choose to purchase only the rental business assets or all assets, with an equitable price allocation. If Budget declines to exercise its option, the licensee may proceed with the sale, assignment, or transfer, subject to Budget's approval.
If a licensee is transferring their license, they must comply with the terms of Budget's Conditional Consent Letter, pay all amounts due to Budget and other members of the network, as well as amounts owed to creditors for the rental business. The licensee is also responsible for providing all final documentation and facilitating communication between Budget, the proposed transferee, and themselves. A transfer fee of $2,500.00 (plus CPI-U adjustment) is due when the licensee requests Budget to review a proposed transfer, along with any out-of-pocket expenses incurred by Budget during the transfer review, up to a maximum of $7,500.00. The transfer fee is refunded if the transfer does not occur due to Budget's refusal to approve it.