What does the collateral for an Aerus franchise include, according to the schedule?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Security Interest. To secure the due and punctual payment of all amounts due to Company for the proceeds arising from the sale or return to Company of the Consigned Products, Consignee hereby agrees that Company shall have, and hereby grants to and creates in favor of Company, a security interest in and to the Consigned Products and all proceeds thereof, as more fully-described on the Schedule of Collateral attached hereto (the "Collateral"). Consignee shall pay the cost of filing or recording this Agreement and any related financing statement in all public offices and the cost of all searches of records, wherever filing or recording or searching of records is deemed by Company to be necessary. At the request of Company, Consignee shall, from time to time, execute additional or supplemental documents and agreements to confirm Company's security interest in the Collateral.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, the collateral includes the consigned products and all proceeds from those products. Specifically, Aerus retains full legal and equitable title to these consigned products. To ensure Aerus receives all payments due from the sale or return of these products, the franchisee grants Aerus a security interest in the consigned products and their proceeds. This arrangement is designed to protect Aerus's rights to the consigned products over any other creditors of the franchisee.
The franchisee is responsible for covering the costs associated with filing or recording the security agreement and any related financing statements. This includes the expenses for searches of records deemed necessary by Aerus. Furthermore, the franchisee must execute additional documents or agreements if requested by Aerus to confirm the company's security interest in the collateral.
This security interest ensures that Aerus has a secured position regarding the consigned products, reducing the risk of financial loss if the franchisee faces financial difficulties. For a prospective franchisee, this means understanding that the consigned inventory is not owned by them and is subject to Aerus's security interest. It is important to factor in the costs associated with maintaining this security interest, such as filing and recording fees, into the overall financial planning for the franchise.