How does Budget manage counterparty credit risk associated with its derivative contracts?

According to Budget's 2025 Franchise Disclosure Document, Budget manages counterparty credit risk related to derivative contracts through several methods. These include monitoring the amount for which Budget is at risk with each counterparty. This involves keeping track of the potential losses Budget could incur if a counterparty fails to meet its obligations under the derivative contract.

Budget also periodically evaluates the creditworthiness and financial position of its counterparties. This means Budget regularly assesses the financial health and stability of the companies or entities it enters into derivative contracts with. This helps Budget determine the likelihood that a counterparty will be able to fulfill its contractual obligations. Where possible, Budget disperses its risk among multiple counterparties. By diversifying its derivative contracts across several different counterparties, Budget reduces its overall exposure to any single counterparty's potential default.

These strategies are designed to minimize the potential financial impact on Budget should a counterparty fail to meet its obligations under a derivative contract. For a prospective franchisee, this indicates that Budget actively manages its financial risks, which can contribute to the overall stability and reliability of the franchise system.