In the Aerus franchise agreement, are the obligations undertaken by the franchisee also undertaken by the franchisee's principals?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
14. Representations and Warranties.
A. Franchisee shall use its best efforts to operate the Franchised Business so as to achieve optimum sales in accordance with this Agreement.
B. If a business entity:
- (1) Franchisee is duly organized and validly existing under the law of the jurisdiction of its formation and is duly qualified and authorized to do business in each jurisdiction in which the Franchised Business will operate;
- (2) Franchisee's charter documents currently provide and will at all future times provide that Franchisee's activities shall be confined exclusively to the ownership and operation of an Aerus Business, unless Company otherwise consents in writing;
- (3) Franchisee has provided to Company for review certified copies of its articles of organization or other charter documents, any amendments thereto, resolutions of its Board of Directors or Board of Managers, or consent of its limited partners, authorizing and consenting to entry into and performance of this Agreement, and any certificates, buy-sell agreements or other documents restricting the sale or transfer of equity of the entity, and any other documents as Company may reasonably require prior to the execution of this Agreement;
- (4) The individual executing this Agreement is duly authorized to so execute, has appropriate authority to bind Franchisee as provided hereunder, and is an active, full-time participant in the daily operations of the Franchised Business; and
- (5) Franchisee's execution of this Agreement, and entry into the business arrangement contemplated hereby, do not violate any prior existing obligation, any law or any of the contractual or business relationship of Franchisee or any of Franchisee's principals.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
Based on the 2025 Aerus Franchise Disclosure Document, when a franchisee is a business entity, the franchisee makes several representations and warranties. Specifically, the franchisee warrants that its execution of the agreement and entry into the business arrangement does not violate any prior existing obligation, any law, or any of the contractual or business relationships of the franchisee or any of the franchisee's principals. This suggests that the actions and obligations of the principals are considered in relation to the franchisee's ability to fulfill the agreement.
This section of the franchise agreement emphasizes that Aerus wants to ensure that the franchisee's principals do not have conflicting obligations that would prevent the franchisee from meeting its obligations under the agreement. Aerus aims to protect its interests by ensuring that the franchisee and its principals are free from legal or contractual encumbrances that could hinder the operation of the franchise.
In practical terms, a prospective Aerus franchisee who operates as a business entity needs to ensure that all principals involved are aware of and compliant with the terms of the franchise agreement. This may involve a review of existing contracts or legal obligations of the principals to confirm there are no conflicts. This requirement is not uncommon in franchising, as franchisors typically want to ensure that all parties involved in the franchise operation are aligned and committed to the success of the business.