If the Secured Party elects to sell the Collateral after repossession for an Aerus franchise, what happens to any remainder of the proceeds after satisfaction in full of the Debt?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
If Secured Party elects to sell the Collateral, after deducting from the proceeds of sale or other disposition of the Collateral all expenses (including all reasonable expenses for legal services), Secured Party shall apply such proceeds as provided in Clause (d) below.
Any remainder of the proceeds after satisfaction in full of the Debt shall be distributed as required by applicable law.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, if Aerus Franchising, LLC (Secured Party) sells the collateral after repossession, any remainder of the proceeds after the debt is satisfied in full will be distributed as required by applicable law.
This means that after Aerus has covered all outstanding debts, including principal, interest, collection costs, attorney's fees, and any other obligations the franchisee owes to Aerus, any remaining money from the sale of the collateral will be handled according to the relevant laws. These laws vary by jurisdiction and typically prioritize the order in which creditors and other parties with claims to the assets are paid.
For a prospective Aerus franchisee, this clause provides some assurance that they are entitled to any excess funds remaining after their debts to Aerus are settled through the sale of the collateral. However, the franchisee should be aware that the distribution of these funds is subject to legal requirements, which may involve other creditors or legal claims against the franchisee's assets. It is advisable to consult with a legal professional to fully understand their rights and obligations in such a scenario.