Under what conditions is Aerus not required to replenish inventory for a franchisee?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition to the foregoing, Franchisee shall from time to time during the term of this Agreement, at Company's request, pay to Company as an increase to the Security Deposit, an amount equal to the Standard Allocation of all Consigned Products which remain in Franchisee's
inventory for ninety (90) days or longer. Company will refund such increases to the Security Deposit within thirty (30) days after Franchisee provides evidence satisfactory to Company confirming the sale of such Consigned Products in accordance with the terms of this Agreement.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, Aerus franchisees are required to maintain a security deposit. If Consigned Products remain in the franchisee's inventory for 90 days or longer, Aerus can request an increase to the security deposit equal to the standard allocation of these products. However, Aerus will refund these increases to the security deposit within 30 days once the franchisee provides satisfactory evidence of the sale of the Consigned Products, as per the agreement terms.
This policy ensures that Aerus is protected against potential losses from unsold inventory while also providing franchisees with an opportunity to recover their security deposit increase once the products are sold. It also incentivizes franchisees to manage their inventory effectively and to sell products within a reasonable timeframe to avoid tying up additional funds in the security deposit.
This arrangement is fairly common in franchise systems that involve consignment inventory, as it balances the franchisor's need to protect its assets with the franchisee's need to manage cash flow. Prospective Aerus franchisees should carefully consider the implications of this policy and ensure they have a solid plan for managing their inventory and sales to minimize the impact on their security deposit.