Is Aerus obligated to maintain the Security Deposit in a separate account?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
We or our affiliate will hold the Security Deposit as security against all monies that you owe us or our affiliates, including payment of all fees due and debts incurred under the Franchise Agreement (including your indemnification obligations). We or our affiliates may offset against the Security Deposit all monies that you owe to us or our affiliates. We will provide you notice of any offsets made. If such an offset is made, you must immediately replenish the Security Deposit. We have no obligation to maintain the Security Deposit in a separate account, and we may co-mingle the Security Deposit with any of our accounts or funds. You are not entitled to any interest on the Security Deposit. You may need to increase the Security Deposit from time to time depending on your inventory requirements for Consigned Products. If the Standard Allocation for any Consigned Product in your possession increases, you may be required to increase the amount of your Security Deposit.
Source: Item 5 — Initial Fees (FDD pages 17–20)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, Aerus is not obligated to maintain the security deposit in a separate account. Aerus or its affiliates will hold the security deposit as security against all monies owed to them, including fees and debts incurred under the Franchise Agreement.
The FDD specifies that Aerus or its affiliates may offset against the security deposit any monies owed to them, providing notice of any offsets made. If such an offset occurs, the franchisee must immediately replenish the security deposit.
Furthermore, Aerus explicitly states that it has no obligation to keep the security deposit in a separate account and may co-mingle it with any of their accounts or funds. The franchisee is not entitled to any interest on the security deposit. This arrangement is generally less favorable for the franchisee, as the funds are not held in escrow or a separate account where they might earn interest and be protected from the franchisor's potential financial issues.
The security deposit is equal to 88% of the total Standard Allocation for all Consigned Products provided to the franchisee. The estimated range for aftermarket and service parts and the Security Deposit for Consigned Products is $15,000 to $90,000 under the Standard Program and $5,000 to $20,000 under the Associate Program.