What does the term 'affiliate' mean in the context of the Budget franchise agreement?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
The term "person," as used in this Agreement and the Standards, will mean all natural and legal persons, including corporations, partnerships, sole proprietorships, joint ventures, and other business associations and trusts. The term "affiliate" as used in this Agreement and the Standards will mean any entity controlling, controlled by or under common control of any such person.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the term "affiliate" is specifically defined within the franchise agreement. The document states that an affiliate refers to any entity that either controls, is controlled by, or is under common control with a person or entity involved in the agreement.
For a prospective Budget franchisee, this definition is important because it clarifies the scope of relationships that could be relevant to the franchise agreement. For example, if a franchisee is owned or controlled by another company, that other company would be considered an affiliate. Similarly, any company that the franchisee controls would also be considered an affiliate. This definition helps to establish the boundaries of responsibility and potential liability under the franchise agreement.
The definition of "affiliate" is fairly standard in franchise agreements. It is used to prevent franchisees from circumventing the terms of the agreement by operating through related but nominally separate entities. Franchisees should carefully consider this definition and how it might apply to their specific circumstances, including any existing business relationships or future business ventures.