Does the initial franchise fee for Aerus constitute part of the general operating funds?

According to Aerus's 2025 Franchise Disclosure Document, the initial franchise fee is a payment made by the franchisee to Aerus upon the execution of the franchise agreement. The document defines the "Initial Franchise Fee" as the fee payable by the franchisee to the company when the agreement is executed, with the specific amount detailed in Schedule 3.

While the FDD defines what the initial franchise fee is and when it is paid, it does not explicitly state whether this fee is considered part of Aerus's general operating funds. However, the FDD does detail how Aerus recognizes revenue. Revenue from the sales of individual franchises is recorded as deferred revenue when received and then recognized as revenue over the contractual term of the franchise agreements, which is three years. This suggests that the initial franchise fee contributes to Aerus's overall revenue, but it is not immediately recognized as such.

Because the FDD does not directly address whether the initial franchise fee contributes to general operating funds, prospective franchisees should seek clarification from Aerus regarding how these fees are utilized and accounted for within the company's financial structure. Understanding this aspect can provide valuable insights into the financial stability and operational practices of Aerus.