Towing a manual transmission with the rear wheels on the ground is fine. Just put it in neutral and take off the parking brake. Do not tow an automatic this way or you will destroy the transmission.
The reason they won't rent the equipment to you is that towing a car with the steering wheels on the ground is dangerous. Note: The built in steering wheel lock is NOT strong enough to keep the wheels from shifting. If the wheels shift while you are towing, it could flip you tow vehicle over or throw you out of control.