What is Aerus Debtor prohibited from doing regarding the collateral?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
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- 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, the Debtor (franchisee) is restricted from certain actions regarding the collateral that secures their debt to Aerus Franchising, LLC. Specifically, the franchisee cannot sell or assign the collateral or any interest within, although they may sell inventory to customers in the ordinary course of business unless an Event of Default has occurred. The franchisee also agrees that the collateral will remain at the location stated on the Schedule of Collateral (the "Premises").
Without prior written consent from Aerus Franchising, the franchisee cannot remove or allow the removal of the collateral from the designated premises. However, if the collateral is removed by individuals outside of the franchisee's control, the franchisee is required to promptly notify Aerus Franchising. These restrictions ensure that Aerus Franchising maintains a secure interest in the collateral, protecting their investment and securing the franchisee's obligations under the franchise agreement and associated financial arrangements.
These stipulations are typical in franchise agreements where financing is involved, as they protect the franchisor's investment and ensure the franchisee adheres to the terms of the security agreement. Prospective franchisees should carefully review these restrictions to understand their obligations and limitations regarding the collateral, as any violation could trigger an event of default and potential loss of the franchise.