What happens if the distributee of an Aerus franchise interest after death is not consented to by the company?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon Franchisee (if a natural person) or any Franchisee's principal's death, the executor, administrator or other personal representative of the deceased individual must Transfer
such interest to a third party consented to by Company within twelve (12) months after the death. If no personal representative is designated or appointed or no probate proceedings are instituted with respect to the estate of the deceased individual, then the distributee of such interest must be consented to by Company. If the distributee is not consented to by Company, then the distributee must Transfer such interest to a third party consented to by Company within twelve (12) months after the death of the deceased individual.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, if a franchisee or a principal of the franchisee dies, their interest must be transferred within twelve months. If there is no personal representative designated, the distributee of the franchise interest must be approved by Aerus. If Aerus does not consent to the distributee, that distributee must transfer the franchise interest to a third party that Aerus approves, also within twelve months of the original franchisee's death.
This stipulation ensures that Aerus maintains control over who operates its franchises, even in the event of the franchisee's death. The twelve-month window provides some flexibility for the deceased's estate to find a suitable buyer, but ultimately, Aerus has the final say on who can become a franchisee. This is a fairly standard clause in franchise agreements, as franchisors want to ensure that new franchisees meet their standards and are capable of running the business effectively.
For a prospective Aerus franchisee, this means that their heirs or beneficiaries cannot automatically take over the franchise upon their death unless Aerus approves them. If none of the potential successors are approved, the estate will need to sell the franchise to a third party approved by Aerus. This could potentially create a situation where the estate has to sell the franchise quickly, possibly at a less favorable price, to comply with the twelve-month deadline. It is important for prospective franchisees to consider this when planning their estate and to discuss potential succession plans with Aerus.