What happens to the Aerus franchise agreement if the franchisee is in default under a material contract with Aerus or its affiliates?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition, the following shall be "Events of Default" under this Agreement: (a) Consignee shall default under this Agreement or fail to perform or observe any of the agreements or covenants set forth in this Agreement or fail to pay when due any invoice or invoices covering products subject to this Agreement; (b) Consignee shall be declared to be in default under any material contract, agreement, or instrument to which Consignee is a party with Company or Aerus Franchising, or either of their affiliates or assigns, including without limitation the Franchise Agreement and documents incidental or related thereto, and such default shall continue beyond any applicable cure period; (c) Consignee shall sell, remove, or attempt to sell, remove, or assign Collateral not in the ordinary course of business; (d) any creditor of Consignee shall obtain possession of any Collateral by means including, without limitation, levy, distraint, replevin or self-help.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to the 2025 Aerus Franchise Disclosure Document, if a franchisee defaults under any material contract with Aerus, Aerus Franchising, or their affiliates or assigns, it constitutes an 'Event of Default' under the agreement. This includes, but isn't limited to, the Franchise Agreement itself and any related documents.
This default allows Aerus to terminate the agreement if the default continues beyond any applicable cure period. This means that Aerus must provide an opportunity for the franchisee to correct the default within a specified timeframe, if such a cure period is applicable. If the franchisee fails to remedy the default within that period, Aerus has the right to terminate the franchise agreement.
This provision protects Aerus by ensuring franchisees adhere to all contractual obligations, not just those within the franchise agreement itself. It also motivates franchisees to maintain good standing in all their dealings with Aerus and its related entities, as a default in any material contract could jeopardize their franchise. Prospective franchisees should carefully review all contracts and agreements with Aerus and its affiliates to understand their obligations and the potential consequences of default.