What is the definition of 'beneficial owners' according to the Budget franchise agreement?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
- 14.16 Meaning of "Beneficial Owners." The term "beneficial owners" as used in this Agreement and the Standards will mean all persons who directly or indirectly own any sole proprietorship, partnership, joint venture, shareholder or other type of ownership interest (whether legally or beneficially) in the Licensee.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the term "beneficial owners" is defined within the franchise agreement. Specifically, it refers to all individuals or entities that directly or indirectly possess any form of ownership interest in the Licensee. This encompasses sole proprietorships, partnerships, joint ventures, shareholders, or any other type of ownership, whether legally recognized or held beneficially.
This definition is important because Budget relies on the identified beneficial owners when entering into the agreement. These individuals may be required to execute standard Nondisclosure and Noncompetition Agreements, as well as Personal Guarantees. This ensures that those with a vested interest in the Budget franchise are committed to maintaining confidentiality, refraining from competitive activities, and guaranteeing the financial obligations of the franchise.
Furthermore, the franchise agreement stipulates that the Licensee must 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. This list must be furnished to Budget upon execution of the agreement, within ten days of any change, and at any other reasonable times upon Budget's request. This requirement allows Budget to keep track of who ultimately controls and benefits from the franchise, ensuring compliance with the franchise agreement and maintaining the integrity of the Budget system.