What actions related to insolvency or bankruptcy would constitute an event of default for an Aira Fitness franchisee?

According to the 2025 Aira Fitness Franchise Disclosure Document, several actions related to insolvency or bankruptcy can trigger an event of default. If an Aira Fitness franchisee becomes insolvent, commits an act of bankruptcy, files a voluntary petition in bankruptcy, or has an involuntary petition in bankruptcy filed against them, it constitutes an event of default. This also applies if a permanent or temporary receiver or trustee is appointed for the Aira Fitness business or its property, and such appointment is not actively opposed through legal action. Making an assignment or arrangement for the benefit of creditors, calling a meeting of creditors, or making a written statement indicating an inability to pay debts as they become due are also considered events of default. Furthermore, a levy of execution upon the franchisee or an outstanding attachment or lien on the Aira Fitness business for thirty days, unless contested in good faith, will trigger a default.

These stipulations mean that Aira Fitness franchisees must maintain financial solvency to avoid being in default of their franchise agreement. Any significant financial distress that leads to insolvency, bankruptcy filings, or actions taken for the benefit of creditors can result in the termination of the franchise agreement. The franchisee is expected to actively oppose any involuntary petitions or appointments of receivers or trustees to protect their interests. Additionally, franchisees must address any attachments or liens promptly, either by resolving them or contesting them legally.

Notably, the FDD states that in the event of voluntary or involuntary bankruptcy, Aira Fitness has the right of first refusal to purchase the franchisee's interest in the business. This means that before a franchisee can transfer their interest to a third party during bankruptcy proceedings, they must first offer it to Aira Fitness. The purchase price in such cases will be determined by a qualified appraiser, and the transaction documents will be those customary for this type of transaction. This clause protects Aira Fitness's interests by allowing them to maintain control over the franchise location and operations, even in the event of a franchisee's financial distress.