What are the potential liabilities upon default of an Aerus financing agreement?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
from one to five years.
The following table summarizes the previous paragraph:
| Item Financed | Asset Purchase, Security Deposit, Initial Fees, Parts and Supplies |
|---|---|
| Initial Payment | At least $2,500 |
| Term (Yrs.) | 1 to 5 years |
| APR (%) | 0% to 7% (or the maximum rate permitted under applicable law, whichever is less) |
| Monthly Payment | Level payments based on an amount financed |
| Prepay Penalty | None, you may prepay all amounts owed without penalty |
| Security Required | Limited Personal Guaranty and perfected security interest in assets purchased under the Standard or Associate Programs. |
| Liability Upon Default | Accelerated balance, late fee equal to 5% of any overdue amount, termination of Franchise Agreement; interest, attorneys' fees and collection costs, foreclosure on secured assets |
| Loss of Legal Right On Default | Waive demand for payment, presentment, protest, notice of protest and non-payment, or other notice of de |
Source: Item 10 — Financing (FDD pages 34–36)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, if a franchisee defaults on a financing agreement with Aerus, several liabilities may arise. These include acceleration of the outstanding balance, meaning the entire remaining debt becomes immediately due. Additionally, Aerus may impose a late fee equal to 5% of any overdue amount. The Franchise Agreement itself could be terminated, resulting in the loss of the franchise. Aerus may also charge interest, attorneys' fees, and collection costs incurred in pursuing the debt. Finally, Aerus can foreclose on any secured assets, potentially seizing assets purchased with the financing.
The financing that Aerus or its affiliates may offer covers initial fees, security deposits, accessories, parts and supplies, and the purchase of assets of an existing Aerus business. The interest rate on any promissory note will range from 0% to 7% per annum (or the maximum rate permitted by applicable law, whichever is less) for a term of one to five years.
Events of default under the Note include failure to pay amounts within 5 days of the due date, fraud or misrepresentation, theft or conversion of assets, misuse or infringement of intellectual property, bankruptcy or insolvency, and default under any agreement with Aerus. The franchisee also waives certain legal rights on default, such as demand for payment and notices of default. These terms are typical in financing agreements to protect the lender's interests, but franchisees should carefully review the Note and related agreements to fully understand their obligations and potential liabilities.