What legend is required to be printed on certificates evidencing ownership of equity securities for a Budget franchise?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding the foregoing, Licensee will provide to Budget prior written notice of any proposed sales, assignments or transfers constituting any change in the equity ownership or control of Licensee or the Rental Business. Furthermore, Licensee will maintain stop-transfer instructions against the transfer on its records of any equity securities of Licensee; and all certificates evidencing ownership of equity securities will have the following legend printed legibly and conspicuously on their face:
"Transfer of these shares is restricted by an Budget Rent A Car System License Agreement with Budget Rent A Car System, Inc."
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, all certificates evidencing ownership of equity securities must have a specific legend printed on their face. This legend informs any potential purchaser that the transfer of these shares is restricted by a Budget Rent A Car System License Agreement with Budget Rent A Car System, Inc.
This requirement ensures that anyone acquiring an ownership stake in a Budget franchise is aware of the limitations and obligations associated with the franchise agreement. It protects Budget's interests by ensuring that transfers of ownership are subject to their approval and the terms of the license agreement. This is a standard practice in franchising to maintain brand consistency and control over who operates under the brand name.
Prospective Budget franchisees should understand that this restriction on the transfer of shares could affect their ability to sell their business or raise capital. They should carefully review the Budget Rent A Car System License Agreement and Transfer Requirements to fully understand the implications of these restrictions. It is important to consult with a legal and financial advisor to assess the impact of these provisions on their investment.