Can an Aerus franchisee or a third party substitute their judgment for the company's reasonable business judgment according to the franchise agreement?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
Marks, which businesses and systems may offer or sell products and services similar or identical to the Products, and may do so (or grant licenses or franchises for third-parties to do so) within any part of the Area of Responsibility (except as limited by the rights granted hereunder). The right granted under this Agreement is only for the operation of the Franchised Business in accordance with this Agreement. Franchisee is granted no rights of any kind in and to any other business or system that may now or hereafter be owned, operated or licensed by Company or any of its Affiliates. Company and Company's Affiliates retain all rights not expressly granted herein. Company reserves the right to provide new products and services under the System, and to require or permit new products and services to be provided, marketed, promoted, distributed or sold hereunder by Franchisee through the Franchised Business, and may, in connection therewith, without limitation (1) require Franchisee to execute an additional or supplemental agreement and (2) require the payment of a royalty.
- I. If not an existing Aerus Business, Franchisee shall open the Franchised Business at an Approved Location not later than the Opening Date. Company will identify any modifications or improvements to the premises of the Franchised Business, if any, which Franchisee shall make, at Franchisee's expense, prior to the Opening Date, or within such time period ending after the Opening Date as Company may designate in writing.
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- Term. Unless sooner terminated as provided herein, the duration of the initial term (the "Initial Term") and the renewal term (the "Renewal Term") will be as stated in Schedule 1 attached hereto, which, collectively, shall constitute the "Term" of this Agreement. Upon the expiration of the Initial Term, Franchisee may renew the franchise for one (1) Renewal Term, provided Company is then offering new franchise rights for the establishment of Aerus Businesses in the State where the franchise subject to renewal is located and provided Franchisee meets all of the following conditions: (1) Franchisee has no uncured Event of Default under the Agreement at the time of renewal; (2) Franchisee gives Company written notice of Franchisee's desire to renew at least thirty (30) days prior to the end of the Initial Term; (3) Franchisee has achieved ten thousand dollars ($10,000) or more in Gross Sales each month during the prior six (6) months; (4) Franchisee executes Company's then-current form of franchise agreement, which, upon execution, will supersede this Agreement and which may differ from the terms of this Agreement, including, without limitation, the payment of higher or additional fees and revised Minimum Sales Requirements; (5) Franchisee pays Company a renewal fee of one hundred dollars ($100) (in lieu of paying an initial franchisee fee); and (6) Franchisee and its principals and guarantors execute a general release, in a form satisfactory to Company, of any and all claims against Company and Company's current and former Affiliates, officers, directors, owners, employees, and agents.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
Based on the 2025 Aerus Franchise Disclosure Document, franchisees are expected to operate their businesses according to the agreement set by Aerus. The franchisee's rights are limited to operating the franchised business as outlined in the agreement, and Aerus retains rights not explicitly granted to the franchisee. Aerus can introduce new products and services and require franchisees to offer them, potentially necessitating additional agreements and royalty payments.
Aerus maintains significant control over various aspects of the business. For example, franchisees must secure Aerus's written approval before conducting business under any name other than the Approved Name, selling to unapproved customers, advertising outside their designated area, or selling to individuals outside their territory. Franchisees must also adhere to Aerus's guidelines for online activities and use of trademarks. They are restricted from selling non-approved products or selling products outside the Approved Location in a manner inconsistent with the Aerus system.
While franchisees can hire their own employees, consultants, and agents, Aerus can set minimum staffing requirements and hours of operation. The agreement specifies that franchisees must use their best efforts to achieve optimum sales in accordance with the agreement. Overall, the franchise agreement emphasizes adherence to Aerus's standards and policies, limiting the franchisee's ability to substitute their own business judgment for that of Aerus.