Is the Aerus guarantee a guarantee of payment or a guarantee of collection?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) This Guarantee is a guaranty of payment and not of collection.
Guarantor agrees that Lender need not attempt to collect any Guaranteed Obligations from Borrower, Guarantor or any other Obligor or to realize upon any collateral, but may require Guarantor to make immediate payment of all of the Guaranteed Obligations to Lender when due, whether by maturity, acceleration or otherwise, or at any time thereafter.
Lender may apply any amounts received in respect of the Guaranteed Obligations to any of the Guaranteed Obligations, in whole or in part (including attorneys' fees and legal expenses incurred by Lender with respect thereto or otherwise chargeable to Borrower or Guarantor) and in such order as Lender may elect.
- (c) Payment by Guarantor shall be made to Lender at the office of Lender from time to time on demand as Guaranteed Obligations become due.
Guarantor shall make all payments to Lender on the Guaranteed Obligations free and clear of, and without deduction or withholding for or on account of, any setoff, counterclaim, defense, duties, taxes, levies, imposts, fees, deductions, withholding, restrictions or conditions of any kind.
One or more successive or concurrent actions may be brought hereon against Guarantor either in the same action in which Borrower or any other Obligor is sued or in separate actions.
In the event any claim or action, or action on any judgment, based on this Guarantee is brought against Guarantor, Guarantor agrees not to deduct, set-off, or seek any counterclaim for or recoup any amounts which are or may be owed by Lender to Guarantor.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, the guarantee associated with their financing arrangements is a guarantee of payment, not a guarantee of collection. This distinction is crucial for anyone acting as a guarantor for an Aerus franchisee's obligations.
As a guarantee of payment, the guarantor is obligated to make immediate payment on the guaranteed obligations when due. Aerus (as the Lender) is not required to first attempt to collect from the franchisee (Borrower) or to realize upon any collateral before demanding payment from the guarantor. This means the guarantor's responsibility is primary and immediate upon the franchisee's default.
The guarantor is responsible for all guaranteed obligations, including principal, interest, charges, fees, costs, and expenses. The guarantor must make payments to Aerus without any deductions or withholdings for any setoff, counterclaim, defense, duties, taxes, or other conditions. Aerus can pursue actions against the guarantor, even in separate actions from those against the franchisee. The guarantor also waives the right to deduct, set-off, or seek any counterclaim against Aerus in any claim or action based on the guarantee.
This type of guarantee places a significant responsibility on the guarantor, as they are essentially stepping in to ensure the debt is paid regardless of the borrower's ability to pay or the availability of collateral. Prospective guarantors should fully understand these obligations and potential financial risks before agreeing to guarantee an Aerus franchisee's debt.