What specific instruction must Budget Licensees maintain against the transfer of equity securities on their records?

According to Budget's 2025 Franchise Disclosure Document, Budget licensees must maintain stop-transfer instructions against the transfer on its records of any equity securities of Licensee. Additionally, all certificates evidencing ownership of equity securities must have a specific legend printed legibly and conspicuously on their face. This legend must state: "Transfer of these shares is restricted by an Budget Rent A Car System License Agreement with Budget Rent A Car System, Inc."

This requirement ensures that Budget maintains control over who owns and operates its franchises. By mandating stop-transfer instructions and a conspicuous legend on equity certificates, Budget aims to prevent unauthorized transfers of ownership that could compromise the brand's standards or financial stability. This measure allows Budget to carefully vet potential new owners and ensure they meet the company's criteria before they can acquire a stake in a franchise.

For a prospective Budget franchisee, this means that any transfer of equity ownership, even a small percentage, is subject to Budget's scrutiny and approval. The franchisee must proactively manage their equity records and ensure that all securities clearly indicate the transfer restrictions. Failure to comply with these requirements could result in a breach of the franchise agreement and potential legal consequences. Franchisees should consult with legal counsel to ensure they fully understand and comply with these transfer restrictions.

This level of control over equity transfers is common in franchising, as franchisors seek to maintain brand consistency and protect their investment. However, the specific requirements can vary from franchise to franchise. Prospective franchisees should carefully review the transfer provisions in the Franchise Agreement and seek clarification from the franchisor on any ambiguous terms.