In Budget's Consolidated Financial Statements, what happens to intercompany transactions during consolidation?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
The Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and include the accounts of our Company and all entities in which we have a direct or indirect controlling financial interest and variable interest entities for which we have determined we are the primary beneficiary. We consolidate joint venture activities when we have a controlling interest and record non-controlling interests within stockholders' equity and the statement of comprehensive income equal to the percentage of ownership interest retained in such entities by the respective non-controlling party. Intercompany transactions have been eliminated in consolidation.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 79)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the consolidated financial statements include the accounts of Avis Budget Group, Inc., its subsidiaries, and entities in which Avis Budget Group, Inc. has a controlling financial interest. These statements are prepared following accounting principles generally accepted in the United States of America (GAAP). When preparing these consolidated statements, transactions between these related companies are eliminated.
In practical terms, this means that any financial transactions (such as payments, loans, or services) between Budget and its subsidiaries are removed from the overall financial picture presented in the consolidated statements. This is a standard accounting practice to avoid inflating revenue or expenses by counting the same transaction multiple times within the larger corporate group.
For a prospective Budget franchisee, this is important to understand because the consolidated financial statements provide a view of the overall financial health of Avis Budget Group, Inc., the parent company. The elimination of intercompany transactions ensures that the financial data presented reflects the true economic performance of the entire organization, without distortion from internal dealings. This gives franchisees and investors a clearer picture of the financial stability and performance of the company that supports the Budget brand.