What happens to Aerus's security interest in the collateral upon termination of the consignment agreement?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
This Agreement may be terminated by Company for any reason upon thirty days prior written notice, however, the security interest in the Collateral shall survive until payment in full has been made for products consigned from Company.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, the company's security interest in the collateral will survive the termination of the consignment agreement. Aerus retains this security interest until the franchisee has made full payment for all products consigned from the company.
This means that even if the consignment agreement is terminated, Aerus still has a legal claim on the consigned products (the collateral) until the franchisee has paid off the outstanding balance for those products. This protects Aerus's financial interests by ensuring they can recover the value of the consigned products if the franchisee fails to pay.
For a prospective Aerus franchisee, this implies that termination of the consignment agreement does not automatically release them from their financial obligations. They must still pay for all consigned products to fully clear their obligations and release Aerus's security interest in the collateral. This clause is designed to protect Aerus in case of default or termination, ensuring they can recoup their investment in the consigned products.