Under what circumstances is an Aerus franchisee declared to be in default under a material contract?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition, the following shall be "Events of Default" under this Agreement: (a) Consignee shall default under this Agreement or fail to perform or observe any of the agreements or covenants set forth in this Agreement or fail to pay when due any invoice or invoices covering products subject to this Agreement; (b) Consignee shall be declared to be in default under any material contract, agreement, or instrument to which Consignee is a party with Company or Aerus Franchising, or either of their affiliates or assigns, including without limitation the Franchise Agreement and documents incidental or related thereto, and such default shall continue beyond any applicable cure period; (c) Consignee shall sell, remove, or attempt to sell, remove, or assign Collateral not in the ordinary course of business; (d) any creditor of Consignee shall obtain possession of any Collateral by means including, without limitation, levy, distraint, replevin or self-help.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, a franchisee can be declared in default under a material contract under specific circumstances. The franchisee will be in default if they are declared to be in default under any material contract, agreement, or instrument to which the franchisee is a party. This includes contracts with Aerus Franchising, the company itself, or their affiliates or assigns. This also includes, without limitation, the Franchise Agreement and documents incidental or related to it.
This default will only trigger further action if it continues beyond any applicable cure period. This means that Aerus must provide an opportunity for the franchisee to correct the issue within a certain timeframe, if a cure is possible. If the franchisee fails to remedy the default within that period, Aerus can then take further action, such as terminating the agreement.
This provision protects Aerus by ensuring that franchisees meet their contractual obligations, not only under the franchise agreement but also under any other agreements they have with Aerus or related entities. For a prospective franchisee, this highlights the importance of understanding all contractual obligations and ensuring compliance to avoid potential default and subsequent termination of the franchise agreement.