What happens if an Aerus franchisee defaults on their payment obligations under a financing agreement?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
from one to five years.
The following table summarizes the previous paragraph:
| Item Financed | Asset Purchase, Security Deposit, Initial Fees, Parts and Supplies | |--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | Initial Payment | At least $2,500 | | Term (Yrs.) | 1 to 5 years | | APR (%) | 0% to 7% (or the maximum rate permitted under applicable law, whichever is less) | | Monthly Payment | Level payments based on an amount financed | | Prepay Penalty | None, you may prepay all amounts owed without penalty | | Security Required | Limited Personal Guaranty and perfected security interest in assets purchased under the Standard or Associate Programs. | | Liability Upon Default | Accelerated balance, late fee equal to 5% of any overdue amount, termination of Franchise Agreement; interest, attorneys' fees and collection costs, foreclosure on secured assets | | Loss of Legal Right On Default | Waive demand for payment, presentment, protest, notice of protest and non-payment, or other notice of default, notice of acceleration and intention to accelerate or any other notice | Except in very limited circumstances, the inventory security deposit and initial franchise fee must be paid in cash and neither we nor an affiliate will finance the Security Deposit or the Initial Franchise Fee.
The Note is governed by Texas law. See Exhibit 3. Events of default under the Note include: (i) failure to pay amounts within 5 days of the due date; (ii) fraud or misrepresentation in connection with the execution of or performance under the Franchise Agreement, the Note or any other financing agreements; (iii) theft or conversion of our assets or any of the assets of our affiliates, including any Consigned Products or proceeds from the sale of any Consigned Products (which may include selling Consigned Products at prices below the required prices); (iv) misuse or infringement of any trademark or other item of intellectual property or right owned or licensed by us or any of our affiliates; (v) bankruptcy or insolvency of you or your guarantors; (vi) default under any Franchise Agreement with us; and (vii) default under any agreement, document, or
instrument or any franchise or other agreement entered into with us or our affiliates, which default or breach continues beyond any period of grace therein provided.
We and our affiliates do not sell, assign, or discount to a third party all or part of any financing offered. We do not receive any consideration for any financing you place with a third party lender.
Source: Item 10 — Financing (FDD pages 34–36)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, several consequences can arise if a franchisee defaults on their payment obligations under a financing agreement with Aerus or its affiliates. Aerus may terminate the Franchise Agreement. The franchisee will be subject to an accelerated balance, a late fee equal to 5% of any overdue amount, and responsibility for interest, attorneys' fees, and collection costs. Aerus can also foreclose on secured assets.
Additionally, the FDD outlines specific events that constitute default under the secured promissory note, which is governed by Texas law. These events include failure to pay amounts within 5 days of the due date, fraud or misrepresentation related to the Franchise Agreement or the note, theft or conversion of Aerus's assets (including consigned products), misuse of Aerus's intellectual property, bankruptcy or insolvency of the franchisee or their guarantors, default under any Franchise Agreement with Aerus, and default under any other agreement with Aerus or its affiliates.
Furthermore, upon default, the franchisee waives certain legal rights, including the right to demand payment, presentment, protest, notice of protest and non-payment, notice of acceleration, and any other notice of default. This means Aerus is not obligated to provide the franchisee with standard legal notifications before pursuing remedies for the default. The interest rate on the note ranges from 0% to 7% per annum (or the maximum rate permitted by applicable law, whichever is less), with a term of one to five years.
The financing that Aerus or its affiliates may offer covers initial fees, security deposits, accessories, parts and supplies purchased from them, and the purchase of assets of an existing Aerus business. The initial down payment ranges from approximately $2,500 to $50,000, with the balance paid in equal monthly installments. The security required includes a limited personal guaranty and a perfected security interest in assets purchased under the Standard or Associate Programs.