If Budget allows a private offering by a Budget licensee, what additional fee might the licensee have to pay to Budget?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, if Budget allows a licensee to conduct a private offering, the licensee will be required to pay a higher transfer fee. The exact amount of this higher transfer fee is to be reasonably determined by Budget. The licensee must also adhere to the other transfer requirements outlined in Exhibit F of the FDD.
This means that while Budget generally restricts licensees from becoming public companies or engaging in public offerings, it may, under certain circumstances, permit a private offering. However, this permission comes with the condition of paying a higher transfer fee, the specific amount of which is not predetermined but will be assessed by Budget at the time of the offering.
For a prospective Budget franchisee, this implies that seeking outside investment through a private offering is possible but subject to Budget's approval and additional costs. It is important to carefully review Exhibit F of the FDD to understand all the transfer requirements and to discuss with Budget how the 'higher transfer fee' is calculated to fully understand the financial implications of a private offering.