Does the Aerus security agreement include future advances made by the secured party for the protection of the collateral in the definition of 'Debt'?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) "Debt" shall mean (i) all the indebtedness of Debtor evidenced by the Note, both principal and interest, and any and all extensions, renewals or refinancing thereof in whole or in part, (ii) all costs and expenses incurred by Secured Party in any collection of such indebtedness, including, without limitation, reasonable attorney's fees and costs, (iii) all future advances made by Secured Party for the protection and preservation of the Collateral or any portion thereof, (iv) all other obligations and liabilities of Debtor to Secured Party from time to time arising under or pursuant to this Security Agreement, (v) all indebtedness and obligations arising under or incurred in connection with the transactions contemplated by the Franchise Agreement; and (vi) all other existing and future indebtedness, liabilities and obligations of Debtor to Secured Party, Aerus LLC, and/or their affiliates, whether now or hereafter existing whether or not related to this Security Agreement or the Note, whether or not contemplated by Secured Party or Debtor at the date hereof, whether absolute or contingent, joint and/or several, including without limitation all indebtedness, obligations and liabilities of Debtor to Secured Party incurred pursuant to any extension, renewal or substitutions of any Debt;
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, the security agreement does include future advances made by the secured party for the protection of the collateral in the definition of 'Debt'. The security agreement outlines what constitutes 'Debt' in relation to the agreement. This definition includes not only the principal and interest from the promissory note but also any costs Aerus incurs while collecting debts.
Specifically, the definition of 'Debt' includes all future advances that Aerus makes to protect and preserve the collateral. This means that if Aerus needs to spend money to safeguard the assets used as security for the debt, those expenses also become part of the franchisee's debt. Additionally, all other obligations the franchisee owes to Aerus under the security agreement are included, as well as any debts arising from the franchise agreement itself.
Furthermore, the definition extends to all other existing and future indebtedness, liabilities, and obligations of the franchisee to Aerus, its LLC, and their affiliates. This broad definition covers debts whether or not they are related to the security agreement or the note, and whether or not they were contemplated by Aerus or the franchisee when the agreement was signed. This includes any extensions, renewals, or substitutions of any debt, ensuring that the security agreement covers a wide range of financial obligations.