What is the meaning of 'Initial Term' in the Aerus franchise agreement?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
Company will identify any modifications or improvements to the premises of the Franchised Business, if any, which Franchisee shall make, at Franchisee's expense, prior to the Opening Date, or within such time period ending after the Opening Date as Company may designate in writing.
-
- Term. Unless sooner terminated as provided herein, the duration of the initial term (the "Initial Term") and the renewal term (the "Renewal Term") will be as stated in Schedule 1 attached hereto, which, collectively, shall constitute the "Term" of this Agreement. Upon the expiration of the Initial Term, Franchisee may renew the franchise for one (1) Renewal Term, provided Company is then offering new franchise rights for the establishment of Aerus Businesses in the State where the franchise subject to renewal is located and provided Franchisee meets all of the following conditions: (1) Franchisee has no uncured Event of Default under the Agreement at the time of renewal; (2) Franchisee gives Company written notice of Franchisee's desire to renew at least thirty (30) days prior to the end of the Initial Term; (3) Franchisee has achieved ten thousand dollars ($10,000) or more in Gross Sales each month during the prior six (6) months; (4) Franchisee executes Company's then-current form of franchise agreement, which, upon execution, will supersede this Agreement and which may differ from the terms of this Agreement, including, without limitation, the payment of higher or additional fees and revised Minimum Sales Requirements; (5) Franchisee pays Company a renewal fee of one hundred dollars ($100) (in lieu of paying an initial franchisee fee); and (6) Franchisee and its principals and guarantors execute a general release, in a form satisfactory to Company, of any and all claims against Company and Company's current and former Affiliates, officers, directors, owners, employees, and agents. In the event the parties continue to perform under this Agreement after expirat
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, the 'Initial Term' refers to the duration of the initial franchise term, the length of which is specified in Schedule 1 of the franchise agreement. The 'Term' of the agreement collectively includes both the Initial Term and any Renewal Term. This means the Initial Term is the period for which the franchise is initially granted, setting the stage for the franchisee's operations and investment recovery.
Upon the expiration of the Initial Term, an Aerus franchisee has the option to renew the franchise for one additional term, known as the 'Renewal Term'. However, this renewal is contingent upon several conditions. Aerus must be offering new franchise rights in the state where the franchise is located at the time of renewal. The franchisee must also not be in default of the agreement, must provide written notice of their intent to renew at least 30 days before the Initial Term ends, and must have achieved at least $10,000 in Gross Sales each month for the six months prior to renewal.
To complete the renewal, the Aerus franchisee must execute the company's then-current franchise agreement, which may have different terms than the original agreement, potentially including higher fees and revised sales requirements. Additionally, the franchisee must pay a renewal fee of $100 and provide a general release of claims against Aerus. If the franchisee continues to operate the business after the Initial Term or Renewal Term expires without a new agreement, the agreement extends on a month-to-month basis, and either party can terminate it with 30 days' written notice. Therefore, understanding the length and conditions of the Initial Term is crucial for planning the long-term operation and potential renewal of an Aerus franchise.