Are Aerus franchisees required to hold all inventory at their franchise locations?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
h, permit or authorize any person or entity other than Franchisee to establish a physical location for the operation of any Aerus Business under any of the Programs listed in Recital C within the area identified as the Protected Area in Schedule 1, attached hereto (the "Protected Area").
G. Notwithstanding anything herein to the contrary, without Company's prior written approval, Franchisee shall not (1) conduct the Franchised Business under any actual or assumed name other than the Approved Name, (2) sell to any person or entity that is not an Approved Customer, (3) advertise, market or solicit sales outside of the Area of Responsibility, (4) sell to any person not residing within the Area of Responsibility, (5) conduct any aspect of the Franchised Business by, through, over or on the internet or world wide web, including without limitation, advertising, marketing and solicitation, unless or until Company establishes a Company sponsored program for such conduct by Franchisees and, then, only as part of and in accordance with such program, (6) use any trade name, trademark or service mark in connection with the Franchised Business other than the Marks (and then only in strict accordance with the terms and conditions of this Agreement, the Policies and Procedures, the Manuals and any specific guidelines imposed by Company), (7) advertise or sell any product or service from an Approved Location or through the Franchised Business bearing any trade name, trademark or service mark other than the Marks, (8) sell any product or service that is not a Product, or (9) permit any Product to be sold from any physical location other than an Approved Location, by any Person other than an authorized representative of Franchisee or in a manner otherwise inconsistent with the System.
H. Notwithstanding the foregoing and without limiting the generality of the provisions contained in this Section, Franchisee acknowledges that Company and its Affiliates and existing franchisees, distributors and licensees operate existing businesses and systems, and may in the future establish and operate new businesses and systems, including Aerus Businesses, under the same and other assumed names, trade names and trademarks as the 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.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, franchisees are generally required to sell products from their approved location. Specifically, franchisees cannot permit any product to be sold from any physical location other than an approved location, by any person other than an authorized representative of the franchisee, or in a manner inconsistent with the Aerus system. This implies that franchisees are expected to maintain inventory at their approved locations to facilitate sales.
However, the FDD also mentions that Aerus sells its machines to franchisees on a consignment basis. This means Aerus retains ownership of the products until the franchisee sells them. The franchisee only recognizes revenue from sales through franchisees as they sell inventory. This consignment arrangement suggests that while franchisees must operate from an approved location, the financial burden of holding unsold inventory is somewhat mitigated, as the products technically remain the property of Aerus until sold.
Furthermore, the FDD states that if a franchisee does not maintain a service and repair center at the approved location, they must discharge and perform this requirement through a contractual arrangement with an existing owner of an Aerus Business approved by Aerus. This indicates some flexibility in how franchisees manage their operations, as they can outsource certain functions if they lack the facilities at their primary location. However, the primary sales activity must still occur at the approved location, reinforcing the need to hold at least some inventory there.