Does the Aerus guarantor waive claims against the borrower for subrogation?
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 irrevocably and unconditionally waives all claims against the borrower for subrogation. This waiver extends to statutory, contractual, common law, equitable, and all other claims against the borrower, any collateral securing the guaranteed obligations, or other assets of the borrower. The waiver also includes claims for reimbursement, exoneration, contribution, indemnification, setoff, or other recourse related to payments made or payable to the lender by the guarantor.
In practical terms, this means that if a guarantor makes payments on behalf of an Aerus franchisee (the borrower) to the lender, the guarantor cannot then seek to recover those payments from the franchisee through subrogation or other legal means. The guarantor is essentially giving up any right to step into the lender's shoes and pursue the borrower for the debt that the guarantor has paid. This waiver also applies to any benefits the guarantor might otherwise receive due to amounts paid by or collected from the guarantor, borrower, or any other obligor on the guaranteed obligations.
This is a significant point for anyone considering acting as a guarantor for an Aerus franchisee. They must understand that their financial exposure is not just limited to the amount of the guarantee, but also includes the potential loss of any recourse against the borrower. The guarantor should carefully consider the financial stability and creditworthiness of the borrower before agreeing to provide a guarantee, as they will have no legal means to recover funds they pay out under the guarantee.
Furthermore, the guarantor's payment obligations to the lender are structured to be free and clear of any deductions or withholdings. This means the guarantor cannot reduce their payments to the lender due to any setoff, counterclaim, defense, duties, taxes, or other restrictions. This ensures that the lender receives the full amount due without any reductions, further emphasizing the guarantor's commitment and financial responsibility in the lending arrangement.