Under what circumstances might Budget not consent to a private offering by a Budget licensee?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
Licensee acknowledges and understands that Budget may not consent to Licensee's private offering if Budget determines, in its sole discretion, that such an offering is not in the best interest of Budget or its franchise system.
If Budget allows a private offering, Licensee will need to pay a higher transfer fee, as reasonably determined by Budget, and meet the other Transfer Requirements contained in Exhibit F.
Licensee will maintain a current list of all owners of record and all beneficial owners of any class of voting securities or securities convertible into voting securities of Licensee and will furnish the list to Budget upon execution of this Agreement, within ten (10) days of any change, and at any other reasonable times upon Budget's request.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, Budget may not consent to a licensee's private offering 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 authority 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 need to pay a higher transfer fee, as reasonably determined by Budget, and meet the other Transfer Requirements contained in Exhibit F. This indicates that Budget can impose additional financial burdens and requirements on licensees who pursue private offerings, likely to offset any perceived risks or administrative costs associated with the transfer.
Budget also requires licensees to maintain a current list of all owners of record and all beneficial owners of any class of voting securities or securities convertible into voting securities. This list must be furnished to Budget upon execution of the License Agreement, within ten days of any change, and at any other reasonable times upon Budget's request. This provision enables Budget to maintain transparency and control over the ownership structure of its franchisees, which is particularly important when considering private offerings that could alter ownership.