Under what condition is an Aerus debtor allowed to retain possession of collateral?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
Except as otherwise provided herein, Debtor may retain possession of the Collateral, and at Debtor's sole expense keep and use the same unless and until an Event of Default shall occur hereunder.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, a debtor, generally the franchisee, may retain possession of the collateral used to secure a debt unless an Event of Default occurs. This is detailed within the security agreement. The franchisee is responsible for the expense of keeping and using the collateral.
However, this right to retain possession is conditional. If an Event of Default occurs, Aerus, as the secured party, has the right to take possession and control of the collateral. Events of Default can include failure to make payments, breach of agreements, insolvency, or seizure of collateral by another creditor.
This clause is typical in secured lending arrangements. It allows the franchisee to use the assets to generate income and repay the debt as long as they are not in default. However, it also protects Aerus's interests by allowing them to seize the assets if the franchisee fails to meet their obligations. Prospective franchisees should carefully review the definition of "Event of Default" in the security agreement to fully understand the circumstances that could trigger the loss of their collateral.