What constitutes a material breach of the Aerus Franchise Agreement that could lead to termination?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
- B.
This Agreement may be terminated prior to the natural expiration of the Term upon the occurrence of any of the following events (which are each deemed material breaches or defaults of this Agreement):
- D.
Without limiting or restricting Company's right to terminate this Agreement at any time as provided herein, Company may implement a system of enforcement of the terms and provisions of this Agreement (including without limitation announced or unannounced compliance audits and "secret shopper" practices), which system may result in deferral of termination under certain circumstances and include any one or more of the following: (1) the imposition of fines or penalties associated with certain violations or breaches; (2) in the case of a royalty, impose a minimum or fixed amount to be paid in place of or in addition to the amount provided in Schedule 3 attached hereto; or (3) in the case of sales of the Products, impose the Minimum Sales Requirement set forth in Schedule 4 attached hereto.
The existence, substance and process of any such system would be the sole and exclusive discretion of Company and may be implemented, revoked or modified (upon reasonable notice to Franchisee) at any time and from time to time.
- E.
Upon expiration or termination of this Agreement, Franchisee and Franchisee's principals shall:
- (1) Immediately cease operation of the Franchised Business and any use of the Marks, Software and Administration Systems or the Customer Data for any reason or purpose; promptly remove all signs, markings, or other writings and, immediately discontinue all advertising or publicity, that tend to indicate that Franchisee is a franchisee of Company or seller of Products; and immediately discontinue all advertising or publicity and take all actions necessary to comply
with the foregoing, including instructing all publishers of any telephone directory or listing not to renew, repeat or insert any listing or advertisement using the word "Aerus", "Lux" or "Electrolux" or any other term or identifier associating Franchisee with Company.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, the franchise agreement can be terminated prior to its natural expiration if certain events occur, which are considered material breaches or defaults of the agreement. These events are not specified in the provided excerpts.
However, the document does outline actions Aerus may take in lieu of immediate termination, such as implementing a system of enforcement that includes fines, penalties, or imposing minimum or fixed royalty amounts, or setting minimum sales requirements. The implementation, revocation, or modification of such a system is at Aerus's sole discretion, with reasonable notice to the franchisee.
Upon termination of the agreement, the franchisee must cease operations, discontinue using Aerus's marks, software, and customer data, and remove any signs indicating they are an Aerus franchisee. They must also notify publishers to discontinue advertising using Aerus's trademarks and inform sales representatives that their agreements are terminated. The franchisee is also obligated to return all confidential information, manuals, agreements, invoices, and other materials related to the franchised business to Aerus.
To fully understand what specific actions or failures constitute a material breach that would lead to termination, a prospective franchisee should carefully review the complete franchise agreement and ask Aerus for a comprehensive list of these events. This is crucial for assessing the risks and responsibilities associated with the franchise.