Under the Aerus Franchise Agreement, what obligation does the Operating Principal have?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
If the Franchise Agreement is signed by a corporation, partnership, limited liability company (or any entity other than a natural person), at least one of the entity's principals (whom we refer to in the Franchise Agreement and in this Disclosure Document as the "Operating Principal") must personally participate in the day-to-day operation of the Franchised Business. If you sign the Franchise Agreement as an individual, you will be the Operating Principal and will be required to personally participate in the day-to-day operation of the Franchised Business.
Your Operating Principal must personally guarantee the Franchisee's obligations under the Franchise Agreement. All parties whom we designate as your principals (those owning at least ten percent (10%) of the Franchised Business) must also personally guarantee your obligations under the Franchise Agreement. Other than your Operating Principal, none of your managers are required to maintain an ownership interest in you or the Franchised Business.
Source: Item 15 — Obligation to Participate in the Actual Operation of the Franchise Business (FDD pages 53–54)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, if the Franchise Agreement is signed by a business entity (corporation, partnership, or limited liability company), at least one of the entity's principals, referred to as the "Operating Principal," must personally participate in the day-to-day operation of the Franchised Business. If the agreement is signed by an individual, that individual will be the Operating Principal and must also personally participate in the daily operations. This requirement ensures that someone with a vested interest and decision-making authority is actively involved in running the Aerus franchise.
Furthermore, the Operating Principal must personally guarantee the Franchisee's obligations under the Franchise Agreement. Additionally, all parties designated as principals (those owning at least ten percent of the Franchised Business) must also personally guarantee the obligations. This stipulation underscores the financial commitment and responsibility that Aerus places on the key individuals involved in the franchise.
This requirement is fairly standard in franchising, as franchisors want to ensure active management and commitment from the franchisee. By requiring the Operating Principal to be involved in daily operations and to personally guarantee the franchisee's obligations, Aerus aims to maintain quality control and protect its brand reputation. This also aligns the interests of the franchisee with those of Aerus, encouraging diligent management and adherence to the franchise agreement.