Under what conditions will a proposed transfer of a Budget license not take effect?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
apply to all licensees who wish to transfer ownership or control of their Budget License Agreement or their Budget Rent a Car business operated pursuant thereto (the "Rental Business"). These Requirements will not constitute a waiver of or otherwise limit Budget's or a Licensee's rights under any Budget License Agreement and will not constitute an amendment or other modification to the terms and provisions of the Transferring Licensee's License Agreement.
I. TRANSFERS, GENERALLY
A. DEFINITION OF TRANSFER
"Transfer" is defined as any transfer, sale, assignment, management agreement or other agreement of any kind, at any time during the term of the Transferring Licensee's License Agreement, and in accord with the provisions thereof, which directly or indirectly results in a change in the beneficial ownership or control of the Licensee, the Rental Business, the Budget franchise, or the identity of the parties dealing with Budget on either an ownership or operational level.
B. APPROVAL BY BUDGET
Before any transfer becomes effective, the written approval of Budget, consistent with the requirements of the Transferring Licensee's License Agreement, must be obtained in accordance with the procedures and requirements set forth below. Transferring Licensee and the proposed Transferee should expect that such review will require at least ninety (90) days followings its submission of the documents referred to in Paragraph D below (and possibly longer in the event that Budget has to update, supplement or register its FDD), but in no event shall the proposed transfer take effect until such time as Budget has completed its review, formally passed on its right of first refusal, provided its written approval to Transferring Licensee in the form of a Conditional Consent Letter and the Transferring Licensee and Licensee properly execute and deliver all required documentation and fees.
C.
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, a proposed transfer of a Budget license will not take effect under certain conditions. Specifically, the transfer cannot occur until Budget has completed its review process. This review includes Budget formally passing on its right of first refusal. Furthermore, Budget must provide written approval to the transferring licensee in the form of a Conditional Consent Letter. Finally, both the transferring licensee and the new licensee must properly execute and deliver all required documentation and fees.
In practical terms, this means a Budget franchisee looking to sell their business must navigate a multi-step approval process with Budget. This process involves submitting various documents for review and ensuring all financial obligations are met. The review period can take at least 90 days, and potentially longer if Budget needs to update its Franchise Disclosure Document. The franchisee is responsible for facilitating communication between Budget and the proposed transferee.
Additionally, any attempted or purported sale, assignment, or transfer that goes against the terms and conditions of the License Agreement or the Transfer Requirements will be considered a breach of the agreement and will be void. This underscores the importance of adhering strictly to the outlined procedures when transferring a Budget franchise. The franchisee must also pay a transfer fee of $2,500, plus potential CPI-U adjustments, and cover any out-of-pocket expenses Budget incurs during the transfer review, up to $7,500. However, this transfer fee is refundable if the transfer does not conclude due to Budget's refusal to approve it.
Therefore, a Budget franchisee needs to be aware of these requirements and the potential for delays or complications when planning to transfer their franchise. Failing to meet these conditions can result in the transfer being deemed invalid, potentially leading to legal and financial repercussions.