Does the Aerus guarantor waive all other notices to which the borrower or guarantor is entitled?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
(a) Notice of acceptance of this Guarantee, the making of loans and advances and providing other financial accommodations to Borrower and presentment, demand, protest, notice of protest, notice of nonpayment or default and all other notices to which Borrower or Guarantor is entitled are hereby waived by Guarantor. Guarantor also waives notice of and hereby consents to, (iii) any amendment, modification, supplement, extension, renewal, or restatement of the Note and any of the other Financing Agreements, including, without limitation, extensions of time of payment of or increase or decrease in the amount of any of the Guaranteed Obligations, interest rate, fees, other charges, or any collateral, and the guarantee made herein shall apply to the Note and the other Financing Agreements and the Guaranteed Obligations as so amended, modified, supplemented, renewed, restated or extended, increased or decreased, (iv) the taking, exchange, surrender and releasing of collateral or guarantees now or at any time held by or available to Lender for the obligations of Borrower or any other party at any time liable on or in respect of the Guaranteed Obligations or who is the owner of any property which is security for the Guaranteed Obligations (individually, an "Obligor" and collectively, the "Obligors"), (v) the exercise of, or refraining from the exercise of any rights against Borrower or any other Obligor or any collateral and (vi) the settlement, compromise or release of, or the waiver of any default with respect to, any of the Guaranteed Obligations. Guarantor agrees that the amount of the Guaranteed Obligations shall not be diminished and the liability of Guarantor hereunder shall not be otherwise impaired or affected by any of the foregoing.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, as part of the guarantee agreement, the guarantor waives certain rights and notices. Specifically, the guarantor waives notice of acceptance of the guarantee, the making of loans and advances, and the provision of other financial accommodations to the borrower. They also waive presentment, demand, protest, notice of protest, notice of nonpayment or default, and all other notices to which the borrower or guarantor is entitled. This means that Aerus, as the lender, is not obligated to provide the guarantor with these specific notices related to the borrower's financial dealings or any defaults.
Additionally, the guarantor consents to amendments, modifications, supplements, extensions, renewals, or restatements of the Note and any other Financing Agreements. This includes changes to the payment schedule, interest rates, fees, or the amount of the Guaranteed Obligations. The guarantor also consents to the taking, exchange, surrender, and releasing of collateral or guarantees held by Aerus for the obligations of the borrower or any other party liable for the Guaranteed Obligations. Furthermore, the guarantor consents to the exercise of or refraining from exercising any rights against the borrower or any other obligor, as well as the settlement, compromise, or release of any default related to the Guaranteed Obligations.
This waiver and consent provision has significant implications for the guarantor. By waiving these notices and consenting to these actions, the guarantor may be held liable for the Guaranteed Obligations even if the terms of the loan or the collateral securing it change without their direct knowledge. The guarantor's liability is not diminished or affected by these changes. This arrangement protects Aerus by streamlining the loan management process and reducing the administrative burden of providing constant updates to the guarantor. However, it places a greater responsibility on the guarantor to independently monitor the borrower's financial situation and the status of the loan to manage their own risk effectively.
Prospective Aerus franchisees who are asked to act as guarantors should carefully consider the implications of these waivers and consents. It is advisable to seek legal counsel to fully understand the extent of their obligations and potential liabilities under the guarantee agreement. They should also maintain open communication with the borrower and Aerus to stay informed about any changes to the loan terms or the borrower's financial condition. This proactive approach can help mitigate the risks associated with the broad waivers and consents included in the guarantee.