Under what circumstances might Budget not consent to a Licensee's private offering of voting securities?

According to Budget's 2025 Franchise Disclosure Document, Budget may not consent to a licensee's private offering of voting securities if Budget determines, in its sole discretion, that such an offering is not in the best interest of Budget or its franchise system. This gives Budget broad latitude to deny a private offering based on its assessment of the potential impact on the brand and the network of franchisees.

If Budget does allow a private offering, the licensee will be required to pay a higher transfer fee, as determined by Budget, and also meet other transfer requirements detailed in Exhibit F. The FDD also states that if Budget consents to the approval of a stock offering, such approval will be conditioned on the transferring licensee's implementation of requirements designed to ensure Budget's existing contract rights and its reasonable business interests, which are designed to preserve the integrity and continued success of the Network and the essential elements of the relationship between Budget and its licensees.

Budget's considerations for approval of any transfer are based upon the judgment of Budget, in light of conditions then prevailing and expected future needs of the System, as to whether and to what extent the proposed transfer will enhance or impair the rights and obligations then existing between Budget and the Licensee, as well as the overall benefit or detriment to the Network. Factors that Budget considers relevant to that decision include the percentage of ownership or control being transferred, the effect the stock offering will have on the management, operation and control of the Rental Business, the accuracy and completeness of the representations and factual statement contained in the stock offering prospectus and other documents concerning the Transferring Licensee's relationship with Budget, the accuracy and completeness of any necessary disclosures in the stock offering prospectus and other documents, concerning Budget's rights of approval and Budget's option to purchase with respect to the initial and any subsequent transfer of the stock, the absence of any express or implied representation that Budget is participating in, or in any way approves of, the underwriting, the issuance or the offer of Transferring Licensee's stock, and the extent to which the stock offering will impair or otherwise adversely affect Budget's rights under the License Agreement.

Prospective franchisees should carefully consider these conditions and restrictions on private offerings, as they could impact their ability to raise capital or transfer ownership in the future. It would be prudent to discuss specific scenarios with Budget during the due diligence process to understand their likely response to different types of proposed offerings.