Considering the litigation disclosed in Item 3, what impact might this have on a Budget franchisee's ability to secure financing (Item 10)?

According to Budget's 2025 Franchise Disclosure Document, Item 23 includes specific risk factors for prospective franchisees in New York, as well as additional stipulations for franchisees in Maryland, Minnesota, Illinois, and North Dakota. Of particular relevance to the question of financing, the document states that there is extensive litigation involving Budget disclosed in Item 3.

The FDD emphasizes the importance of reviewing Item 3 and Exhibit B, which contains laws and regulations concerning the car rental industry, as well as the Department of Justice settlement agreement. Furthermore, Budget expects franchisees to finance 100% of their vehicle fleet. Franchisees must provide security for any loan obtained and personally guarantee the financing.

This guarantee places the franchisee's personal assets, potentially including their house, at risk if the franchise fails. The extensive litigation disclosed in Item 3, combined with the requirement for personal guarantees on 100% fleet financing, could make it more difficult for a prospective Budget franchisee to secure financing. Lenders may view the litigation as a potential risk factor, increasing the perceived risk of default and potentially leading to less favorable loan terms or even denial of financing. Therefore, it is crucial for potential franchisees to carefully review Item 3 and Exhibit B to fully understand the nature and extent of the litigation and its potential impact on their investment.