Does the collateral for an Aerus franchise include proceeds from the inventory?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
at all times retain the full legal and equitable title to the Consigned Products. This Agreement is entered into as a precautionary measure to insure that Company's rights to the Consigned Products shall be first and prior to all other creditors of Consignee under all circumstances.
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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.
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Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, the collateral does include proceeds from the inventory. Aerus retains a security interest in the consigned products and all proceeds from their sale or return. This arrangement ensures that Aerus's rights to the consigned products are prioritized over other creditors.
The franchisee grants Aerus a security interest in the inventory, including all present and future rights, titles, and interests in the inventory. This covers all attachments, renewals, replacements, additions, accessories, increases, parts, substitutes, and proceeds from the inventory, along with all related guarantees, claims, rights, remedies, and privileges.
This security interest remains in effect until full payment is made for the consigned products. Aerus can terminate the agreement under certain default conditions, such as failure to pay invoices, breach of contract, or attempts to sell or remove collateral outside the ordinary course of business. The security interest in the collateral survives any termination until full payment for the consigned products is received by Aerus.