What is an Aerus debtor prohibited from doing regarding the collateral?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
5. Sale or Removal of Collateral.
- (a) Sale of Collateral.
Debtor shall not sell or assign or attempt to sell or assign the Collateral or any interest therein, provided, however, that unless an Event of Default has occurred under this Security Agreement, Debtor may sell the inventory to customers in the ordinary course of business.
- (b) Removal of Collateral.
Except for the sale of Inventory in the ordinary course of business, Debtor covenants and agrees that the Collateral will remain at the location stated on the Schedule of Collateral (the "Premises") and that without the prior written consent of Secured Party, Debtor shall not remove or suffer or permit the removal of the Collateral from the Premises.
If, however, the Collateral is removed from the Premises by persons not within the control of Debtor, Debtor will promptly notify Secured Party in accordance with the applicable provisions of this Security Agreement.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, a debtor is restricted from certain actions regarding the collateral provided as security for their debt. Specifically, the debtor cannot sell or assign the collateral or any interest within it. However, there is an exception: the debtor can sell inventory to customers if an Event of Default has not occurred under the Security Agreement.
Furthermore, the debtor must keep the collateral at the location specified on the Schedule of Collateral, referred to as "the Premises." The debtor needs prior written consent from Aerus Franchising, the Secured Party, before removing or allowing the removal of the collateral from these premises. If collateral is removed by parties outside the debtor's control, the debtor is obligated to promptly inform the Secured Party.
These restrictions protect Aerus Franchising's security interest in the collateral. By preventing unauthorized sale, assignment, or removal of the collateral, Aerus ensures that the assets remain available to satisfy the debt in case of default. Franchisees should be aware of these limitations, as violating them could trigger an Event of Default and potentially lead to the loss of the franchise.