Is Aerus required to maintain the System Media Fund in a separate account from the company's other monies?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
- (c) All sums paid by Franchisee to the System Media Fund shall be maintained in an account separate from the other monies of Company.
The funds shall be used to defray any of Company's reasonable administrative costs and overhead as Company may incur in activities reasonably related to the administration or direction of the System Media Fund and advertising programs for franchisees and the System.
Furthermore, Company shall be permitted a management fee not to exceed 5% of the aggregate amount of the System Media Fund Fees collected during a calendar year.
- (d) It is anticipated that all contributions to and earnings of the System Media Fund shall be expended for advertising and/or promotional purposes as described herein during the taxable year within which the contributions and earnings are received.
If, however, excess amounts remain in the System Media Fund at the end of such taxable year, all expenditures in the following taxable year(s) shall be made first out of accumulated earnings from previous years, next out of earnings in the current year, and finally from contributions.
- (e) The System Media Fund is operated solely as a conduit for the collection and expenditure of advertising contributions for the purposes stated herein.
Company shall not have a fiduciary obligation in connection with its maintenance or administration of the System Media Fund.
- (f) Although the System Media Fund is intended to be of perpetual duration, Company maintains the right to terminate the System Media Fund.
The System Media Fund shall not be terminated, however, until all monies in the System Media Fund have been expended for advertising and/or promotional purposes.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, the System Media Fund must be maintained in a separate account from Aerus's other monies. This means that all fees paid by franchisees into the System Media Fund are legally required to be kept distinct from the general operating funds of the company. This provides a level of transparency and accountability, ensuring that the money is used for its intended purpose: media and advertising efforts to benefit the Aerus system.
Aerus has discretion over the advertising and promotional programs, including approving creative concepts, materials, media, and placement. The System Media Fund can be used to purchase various forms of media on a local, regional, or national basis. Aerus is also permitted to use the funds to cover reasonable administrative costs and overhead related to managing the System Media Fund and advertising programs. They can also take a management fee, which cannot exceed 5% of the total System Media Fund Fees collected each year.
While the funds are intended to be used for advertising and promotional purposes during the year they are received, any excess amounts remaining at the end of the year will be used first in the following year. These funds will be applied from accumulated earnings, then current year earnings, and finally from contributions. Although the System Media Fund is intended to be perpetual, Aerus retains the right to terminate it, but only after all monies have been spent on advertising and promotional activities. Aerus also clarifies that it does not have a fiduciary obligation related to the maintenance or administration of the System Media Fund.