Does the security interest in the collateral survive termination of the Aerus consignment agreement?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
This Agreement may be terminated by Company for any reason upon thirty days prior written notice, however, the security interest in the Collateral shall survive until payment in full has been made for products consigned from Company.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, the security interest in the collateral will survive the termination of the consignment agreement. Aerus may terminate the agreement for any reason with thirty days prior written notice. However, the security interest in the collateral remains in effect until full payment has been made for all products consigned from Aerus.
This means that even if the consignment agreement is terminated, Aerus retains a legal claim on the consigned products until the franchisee has paid for them in full. This protects Aerus's financial interest in the consigned products.
For a prospective Aerus franchisee, this clause highlights the importance of managing inventory and sales effectively. Franchisees need to ensure timely payments for consigned products to avoid prolonged security interests after the agreement's termination. This also underscores the need to understand the terms of the consignment agreement and the potential financial implications of termination.