Is a Budget licensee permitted to become a public company, either directly or indirectly?

According to Budget's 2025 Franchise Disclosure Document, a licensee is prohibited from becoming a public company, either directly or indirectly. The FDD states that licensees covenant not to become a public company, including through an initial public offering or a merger with an existing public company. This restriction extends to the licensee's securities, any entity owning an equity interest in the licensee, the Budget License Agreement itself, the licensee's assets, and the rental business locations. These may not be offered pursuant to a public offering or merged with an existing public company.

This restriction is in place to maintain control over the brand and ensure that the company's standards are upheld. By preventing franchisees from going public, Budget can better manage the growth and direction of its franchise system. This control helps to protect the brand's reputation and consistency across all locations.

This policy has significant implications for prospective franchisees. It means that a Budget licensee cannot seek public investment to grow their business. If a franchisee wishes to sell or transfer their business, they must comply with Budget's transfer requirements, as detailed in Exhibit F of the FDD. This includes providing Budget with a copy of the sale agreement and all information about the proposed buyer. Budget also retains the right of first refusal, allowing them to purchase the business before it is sold to a third party.