Does the Aerus guarantor waive claims against the borrower for setoff?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
- (c) Guarantor hereby irrevocably and unconditionally waives and relinquishes all statutory, contractual, common law, equitable and all other claims against Borrower, any collateral for the Guaranteed Obligations or other assets of Borrower or any other Obligor, for subrogation, reimbursement, exoneration, contribution, indemnification, setoff or other recourse in respect to sums paid or payable to Lender by Guarantor hereunder and Guarantor hereby further irrevocably and unconditionally waives and relinquishes any and all other benefits which Guarantor might otherwise directly or indirectly receive or be entitled to receive by reason of any amounts paid by or collected or due from Guarantor, Borrower or any other Obligor upon the Guaranteed Obligations or realized from their property.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, the guarantor does waive claims against the borrower for setoff. Specifically, the guarantor waives all statutory, contractual, common law, equitable, and other claims against the borrower, any collateral for the guaranteed obligations, or other assets of the borrower for setoff regarding sums paid to the lender by the guarantor. The guarantor also waives any benefits they might receive due to amounts paid by the guarantor, borrower, or any other obligor.
This means that if the guarantor makes payments to the lender on behalf of the borrower, the guarantor cannot then claim those payments back from the borrower through setoff or other legal means. This waiver is unconditional and irrevocable, providing the lender with greater security in the event of a default by the borrower. The guarantor's rights to seek reimbursement or contribution from the borrower are subordinated to the lender's right to receive full payment of the guaranteed obligations.
This type of waiver is common in franchise agreements where a personal guarantee is required, as it protects the lender's ability to recover funds without facing legal challenges from the guarantor seeking to recoup losses from the borrower. Prospective Aerus franchisees acting as guarantors should understand that they are giving up certain rights to recover funds they pay to the lender under the guarantee. This could have significant financial implications if the borrower defaults and the guarantor is required to make substantial payments.