What constitutes an 'Event of Default' under the Aerus consignment agreement?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition, the following shall be "Events of Default" under this Agreement: (a) Consignee shall default under this Agreement or fail to perform or observe any of the agreements or covenants set forth in this Agreement or fail to pay when due any invoice or invoices covering products subject to this Agreement; (b) Consignee shall be declared to be in default under any material contract, agreement, or instrument to which Consignee is a party with Company or Aerus Franchising, or either of their affiliates or assigns, including without limitation the Franchise Agreement and documents incidental or related thereto, and such default shall continue beyond any applicable cure period; (c) Consignee shall sell, remove, or attempt to sell, remove, or assign Collateral not in the ordinary course of business; (d) any creditor of Consignee shall obtain possession of any Collateral by means including, without limitation, levy, distraint, replevin or self-help.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, several actions can trigger an 'Event of Default' under the consignment agreement. These events allow Aerus to terminate the agreement and protect its interests in the consigned products (referred to as 'Collateral').
Specifically, an 'Event of Default' occurs if the franchisee (Consignee) fails to comply with the consignment agreement, including failing to make timely payments for products. Defaulting on any material contract with Aerus or its affiliates, such as the Franchise Agreement itself, also constitutes an event of default if the default continues beyond any applicable cure period. Selling, removing, or attempting to sell or remove the consigned products outside the normal course of business is another trigger.
Finally, if any creditor of the franchisee obtains possession of the consigned products through legal means like levy, distraint, replevin, or self-help, it is considered an 'Event of Default.' These provisions are designed to protect Aerus's ownership and security interest in the consigned products until they are sold and paid for, or returned.