What is the Aerus debtor prohibited from doing regarding the impairment of the collateral's value?

According to Aerus's 2025 Franchise Disclosure Document, the debtor is restricted from actions that could diminish the value of the collateral. Specifically, the Debtor cannot sell or assign the Collateral or any interest therein, unless an Event of Default has occurred, in which case Aerus may sell inventory to customers in the ordinary course of business. The Debtor also 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.

This restriction protects Aerus's security interest in the collateral, ensuring that the assets used to secure the debt remain available and undiminished in value. For a prospective franchisee, this means understanding that they cannot freely dispose of or relocate the assets that serve as collateral without Aerus's permission, except for selling inventory in the normal course of business, until all obligations are met. This could impact the franchisee's operational flexibility, as any significant changes to asset location or disposition would require franchisor approval.

This type of clause is standard in franchise agreements where financing is involved and collateral is pledged. It is crucial for franchisees to carefully review the definition of "Collateral" in the agreement to fully understand which assets are subject to these restrictions. The franchisee should also be aware of what constitutes an "Event of Default," as this would trigger further limitations on their ability to manage or dispose of the collateral. Franchisees should seek legal counsel to fully understand the implications of these restrictions on their business operations.