Can an Aerus franchisee prepay their debt without penalty?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
from one to five years.
The following table summarizes the previous paragraph:
| Item Financed | Asset Purchase, Security Deposit, Initial Fees, Parts and Supplies |
|---|---|
| Initial Payment | At least $2,500 |
| Term (Yrs.) | 1 to 5 years |
| APR (%) | 0% to 7% (or the maximum rate permitted under applicable law, whichever is less) |
| Monthly Payment | Level payments based on an amount financed |
| Prepay Penalty | None, you may prepay all amounts owed without penalty |
| Security Required | Limited Personal Guaranty and perfected security interest in assets purchased under the Standard or Associate Programs. |
| Liability Upon Default | Accelerated balance, late fee equal to 5% of any overdue amount, termination of Franchise Agreement; interest, attorneys' fees and collection costs, foreclosure on secured assets |
| Loss of Legal Right On Default | Waive demand for payment, presentment, protest, notice of protest and non-payment, or other notice of de |
Source: Item 10 — Financing (FDD pages 34–36)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, franchisees are allowed to prepay their debt without incurring any penalties. This applies to financing offered by Aerus or its affiliates for initial fees, security deposits, accessories, parts and supplies, and the purchase of assets from existing Aerus businesses.
This is a significant benefit for franchisees as it provides financial flexibility. If a franchisee's business performs well and they have extra capital, they can reduce their debt obligations without penalty, saving on interest payments. This contrasts with some franchise financing arrangements that impose prepayment penalties, which can restrict a franchisee's ability to manage their debt effectively.
The terms of Aerus's financing, including the annual percentage rate (APR) which ranges from 0% to 7%, and the loan term of 1 to 5 years, are detailed in the FDD. The franchisee will make level monthly payments based on the financed amount. The debt is secured by a Limited Personal Guaranty and a perfected security interest in the assets purchased under the Standard or Associate Programs. Defaulting on the loan can lead to an accelerated balance, late fees (5% of the overdue amount), termination of the Franchise Agreement, and foreclosure on secured assets.
Prospective franchisees should carefully review the secured promissory note and related financing documents (Exhibit 3 of the FDD) to fully understand the terms and conditions, including default provisions and security requirements. Understanding these details is crucial for managing the financial aspects of the Aerus franchise and avoiding potential pitfalls.