Which items in the Budget Disclosure Document relate to the Personal Guarantee, which was intentionally deleted?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
| OBLIGATION | SECTION IN AGREEMENT | ITEM IN DISCLOSURE DOCUMENT |
|---|---|---|
| w. Non-competition covenants | 1.6 and 11.9 and the Nondisclosure and Noncompetition Agreement of the Budget License Agreement | Item 17 |
| x. Dispute Resolution | 14.9 to 14.13 of the Budget License Agreement XIX of the Intercity Program | Item 17 |
| y. Intercity Rentals | The Intercity Rules and Regulations | Items 1, 6, 8, 16, and 17 |
| z. Personal Guarantee | 12.7 and Exhibit A of the Budget License Agreement were intentionally deleted | Items 1, 7, 15 |
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 37–61)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the Personal Guarantee, found in Section 12.7 and Exhibit A of the Budget License Agreement, was intentionally deleted. However, the items in the disclosure document that relate to it are Items 1, 7, and 15. This indicates that while the specific agreement and exhibit related to the personal guarantee have been removed, these items in the disclosure document still pertain to the general topic, though without the specific personal guarantee details.
For a prospective Budget franchisee, this means that the standard requirement of a personal guarantee has been removed from the agreement. However, Items 1, 7, and 15 of the FDD may still contain information that would have been relevant to the personal guarantee, such as general financial obligations or conditions for the franchise agreement. It is important to carefully review these items to understand any remaining financial responsibilities or implications.
It is unusual for a franchise agreement to have the personal guarantee intentionally deleted. A personal guarantee typically makes the franchisee personally liable for the debts and obligations of the franchise business. The removal of this requirement could be seen as a benefit for the franchisee, reducing their personal risk. However, it may also indicate a different approach to securing the franchisor's investment or managing risk.
Given this unusual circumstance, a prospective Budget franchisee should seek clarification from the franchisor regarding the implications of the personal guarantee's deletion. Specifically, they should inquire about the reasons for its removal, how the franchisor now secures its investment, and what alternative mechanisms are in place to ensure franchisee compliance with financial obligations. Understanding these aspects is crucial for making an informed decision about investing in a Budget franchise.