What items does Aerus require franchisees to purchase or lease for their Franchised Business?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
rough changes in the Manuals.
Required Purchases
You must purchase or lease, install and maintain all of the Products, Product parts and components, fixtures, furnishings, equipment (including electronic cash register, or computer hardware and software and administration systems and satellite communications systems), décor items, signs, uniforms and related items that we prescribe in the Manuals or otherwise in writing, which will be made available to you prior to signing the Franchise Agreement. You must obtain our written consent prior to installing or permitting to be installed any fixtures, furnishings, equipment, decor items, signs, games, vending machines or other items not previously authorized by us. We will promptly furnish to you, on your written request, our then-current standards and specifications applicable to any equipment, supplies, or other products we require, to the extent the standards and specifications do not constitute our trade secrets.
Approved and Designated Suppliers
We have the right to require you to purchase certain approved products and services from us, our affiliates, or other suppliers or providers approved or designated by us, including, for example, Products and other inventory items and supplies, payment processing services, advertising materials, stationery and other printed materials, Product repair equipment, computer hardware and software, electronic cash register and point of sale systems, consumer financing services, approved location décor and signage, and other goods or services necessary to operate a Franchised Business. We and/or our affiliates are presently the designated supplier of Consigned Products and other Products, Product components and parts, related accessories, and approved proprietary computer hardware and software programs. Except for certain of our officers' ownership interests in us and our affiliates, our officers do not have an ownership interest in any of our approved or designated suppliers. We derive, and our affiliates may derive, revenue as a result of required purchases or leases by franchisees. Neither we nor any of our affiliates receive rebates from third parties as result of required purchases or leases by franchisees.
During our fiscal year ended December 31, 2024, we realized approximately $14.41 million of revenue from required purchases and leases by franchisees, primarily consisting of franchisee purchases of Consigned Products and service and aftermarket parts and accessories. This revenue accounted for approximately 91% of our total revenue of approximately $15.83 million in 2024. Our affiliates did not derive any revenue from purchases and leases by franchisees during the fiscal year ending December 31, 2024.
We estimate that required purchases and leases will account for up to 90% of all of your purchases and leases necessary to open a Franchised Business, and up to 80% of your ongoing costs to operate a Franchised Business.
We do not have any purchasing or distribution cooperatives. While we do not presently do so, we may in the future negotiate purchasing arrangements with suppliers of approved and designated goods and services. We do not provide any material benefits such as renewal rights or additional franchises to you if you buy from sources we approve.
Consigned Products and Related Warranties
Most of the Products in your inventory will be Consigned Products which we or our affiliates own. Before the consummation of a sale with an Approved Customer, we or our affiliate, as applicable, will sell the Consigned Product to you for resale to the Approved Customer. If this ownership arrangement is not permitted under applicable law, you will grant us a continuing security interest in all owned or otherwise acquired Consigned Products and their proceeds. You must execute a Security Agreement in the form attached as Exhibit III to each of the Franchise Agreements in order to secure and perfect our security interest in any Consigned Products. You are prohibited from holding any direct or indirect equity interest in the Consigned Products and must refrain from voluntarily or involuntarily granting any third party a direct or indirect equity interest, including any pledge, lien, or other encumbrance, in the Consigned Products without us or our affiliate's prior written approval.
Source: Item 8 — Restrictions on Sources of Products and Services (FDD pages 29–33)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, franchisees must purchase or lease a variety of items to operate their franchised business. These include Products, Product parts and components, fixtures, furnishings, and equipment such as electronic cash registers or computer hardware and software. Additionally, franchisees are required to obtain décor items, signs, uniforms, and related items as prescribed in the manuals or in writing by Aerus.
Franchisees must also purchase or lease an Approved Location for their business, with Aerus retaining the right to require a lease rider that allows them to assume the lease under certain conditions. Furthermore, franchisees are obligated to order an initial inventory of Consigned Products and maintain inventory levels as specified in the manuals. Aerus also has the right to require franchisees to purchase certain approved products and services from them, their affiliates, or designated suppliers. These include Products, inventory items, supplies, payment processing services, advertising materials, stationery, product repair equipment, computer hardware and software, electronic cash registers, point of sale systems, consumer financing services, and approved location décor and signage.
Aerus estimates that required purchases and leases will account for up to 90% of all purchases and leases necessary to open a Franchised Business, and up to 80% of the ongoing costs to operate the business. In 2024, Aerus realized approximately $14.41 million of revenue from required purchases and leases by franchisees, which accounted for approximately 91% of their total revenue of approximately $15.83 million. This indicates a significant reliance on franchisee purchases for Aerus's revenue.
Any vehicle used in connection with the Franchised Business, including those used by sales representatives and Outlet Licensees to deliver Products to Approved Customers, must be clean and in good repair. Franchisees must also obtain and maintain the amounts and types of insurance that Aerus specifies in the Manuals, with a current minimum coverage of $1,000,000 for all lines of insurance. These insurance policies must name Aerus and any designated affiliates as additional named insureds and provide 30 days' prior written notice of any material modification, cancellation, or expiration.