Who benefits from the disposal of equipment after an Aira Fitness franchisee's default?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
To secure the payment and performance by Debtor of all obligations and liabilities under the Franchise Agreement (such payment and performance of such obligations and liabilities collectively, "Obligations"), Debtor shall and hereby does grant, convey, assign and transfer to Secured Party, a security interest in and to the Franchise Agreement and all signs and other personal property bearing any of the Marks used at, located on or affixed to the Aira Fitness Business operated by Debtor, and all fitness equipment, other equipment, fixtures, furniture, inventory and supplies located at Debtor Aira Fitness Business, whether now owned or hereafter acquired by Debtor (the "Collateral").
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
Based on the 2025 Aira Fitness Franchise Disclosure Document, Aira Fitness secures its interests through a security agreement. This agreement stipulates that the franchisee (Debtor) grants Aira Fitness (Secured Party) a security interest in the Franchise Agreement itself, along with all signs, personal property bearing Aira Fitness marks, fitness equipment, other equipment, fixtures, furniture, inventory, and supplies located at the Aira Fitness Business. This collateral secures the franchisee's obligations under the Franchise Agreement.
In the event of a default by the franchisee, as defined in section 3 of the security agreement, Aira Fitness has the right to take possession of and potentially dispose of the specified collateral, including the fitness equipment and other assets of the business. The proceeds from the disposal of these assets would then be used to offset any outstanding debts or obligations the franchisee owes to Aira Fitness.
Therefore, in the event of a franchisee's default, Aira Fitness benefits from the disposal of equipment and other secured assets, as the proceeds can be used to recover losses incurred due to the franchisee's failure to meet their obligations under the Franchise Agreement. This arrangement protects Aira Fitness's financial interests and ensures that they have a means of recourse in case a franchisee does not fulfill their contractual duties.