Does an Aerus franchisee receive interest on the security deposit held by the company?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
Company need not maintain the Security Deposit in a separate account, and Company may co-mingle the Security Deposit with any of Company's accounts or funds.
Franchisee will not be entitled to any interest on the Security Deposit.
In addition to the foregoing, Franchisee shall from time to time during the term of this Agreement, at Company's request, pay to Company as an increase to the Security Deposit, an amount equal to the Standard Allocation of all Consigned Products which remain in Franchisee's inventory for ninety (90) days or longer. Company will refund such increases to the Security Deposit within thirty (30) days after Franchisee provides evidence satisfactory to Company confirming the sale of such Consigned Products in accordance with the terms of this Agreement.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to the 2025 Aerus Franchise Disclosure Document, franchisees are not entitled to any interest on their security deposit. Aerus is not required to keep the security deposit in a separate account and can combine it with the company's other funds. This means that Aerus has the right to use the franchisee's security deposit for its own business purposes without compensating the franchisee. This is a financial risk for the franchisee, as they forego any potential earnings on that deposit.
In addition to the initial security deposit, Aerus may require franchisees to increase their security deposit based on the amount of consigned products that remain in the franchisee's inventory for 90 days or longer. Aerus will refund these increases within 30 days after the franchisee provides satisfactory evidence of the sale of the consigned products. This policy could further tie up a franchisee's capital, as they may need to increase their security deposit based on unsold inventory.
Franchisees should carefully consider the implications of not earning interest on their security deposit and the potential for increases to the deposit based on inventory levels. It is important to factor this into their overall financial planning and assess the potential impact on their profitability. Prospective franchisees may want to inquire about the typical range of security deposit amounts and the likelihood of needing to increase the deposit based on sales performance.