How does Budget record gains and losses on the re-acquisition of license agreements?

According to Budget's 2025 Franchise Disclosure Document, gains and losses from re-acquiring license agreements are recorded in the Consolidated Statements of Operations. These gains or losses are specifically categorized within "transaction-related costs, net" and are recognized upon the completion of the acquisition. This accounting treatment provides transparency into the financial impact of Budget's strategic decisions to consolidate or expand its company-operated locations by re-acquiring existing licenses.

For a prospective Budget franchisee, understanding this accounting practice is crucial because it sheds light on how the company manages its growth and consolidates its operations. When Budget re-acquires a license, any gains or losses associated with that transaction directly affect the company's reported financial performance. These transaction-related costs also include expenses related to acquisition activities, such as due diligence, advisory costs, and the integration of acquired operations, further clarifying the scope of this financial reporting category.

This approach is consistent with standard accounting practices, where gains and losses from specific transactions are recognized in the period they occur to provide an accurate representation of the company's financial performance. By classifying these gains and losses separately, Budget ensures that investors and stakeholders can clearly see the impact of these strategic re-acquisitions on the company's overall financial results. This level of detail can be helpful for franchisees in assessing the financial stability and strategic direction of Budget.