Who benefits from the sale of the Pod after an Aira Fitness franchisee's Event of Default?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
- (f) In its sole discretion, re-lease or sell any or all of the Pod at a public or private sale on such terms and notice as Franchisor's Affiliate shall deem reasonable (such sale may, at Franchisor's Affiliate's sole option, be conducted at Franchisee's premises), and recover from Franchisee damages, not as a penalty, but herein liquidated for all purposes and in an amount equal to the sum of (i) any accrued and all unpaid rent as of the later of (A) the date of default or (B) the date that Franchisor's Affiliate has obtained possession of the Pod or such other date as Franchisee has made an effective tender of possession of the Pod back to Franchisor's Affiliate ("Default Date"), plus interest at the rate of eighteen percent (18%) per annum; (ii) the present value of all future rentals reserved in the Lease and contracted to be paid over the unexpired term of the Lease discounted at a rate equal to the discount rate of the Federal Reserve Bank of Chicago as of the Default Date plus interest on said sum at the rate of eighteen percent (18%) per annum until paid; (iii) all commercially reasonable costs and expenses incurred by Franchisor's Affiliate in any repossession, recovery, storage, repair, sale, release or other disposition of the Pod including reasonable attorneys' fees and costs incurred in connection with or otherwise resulting from the Franchisee's default; (iv) present value of the agreed upon or estimated residual value of the Pod (as of the expiration of this Lease or any renewal thereof) discounted at a rate equal to the discount rate of the Federal Reserve Bank of Chicago as of the date of Default; and (v) any indemnity, if then determinable, plus interest at eighteen percent (18%) per annum, LESS the amount received by Franchisor's Affiliate upon such public or private sale or re-lease of such items of Pod, if any;
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
According to Aira Fitness's 2025 Franchise Disclosure Document, if a franchisee defaults on their lease agreement, Aira Fitness's affiliate has the right to re-lease or sell the Pod. The affiliate can conduct this sale publicly or privately, under terms they deem reasonable.
The proceeds from the sale are applied to cover the franchisee's outstanding debts. These debts include accrued and unpaid rent up to the Default Date, plus interest at 18% per annum. It also includes the present value of all future rentals discounted at the Federal Reserve Bank of Chicago's discount rate as of the Default Date, plus 18% interest. The franchisee is also responsible for all commercially reasonable costs associated with the repossession, storage, repair, or sale of the Pod, including attorney's fees. Additionally, the present value of the Pod's agreed-upon or estimated residual value at the lease's expiration is included, discounted at the Federal Reserve Bank of Chicago's rate as of the Default Date, plus 18% interest.
After the sale, Aira Fitness's affiliate deducts the amount received from the sale or re-lease of the Pod from the total debt owed by the franchisee. Any remaining balance is the responsibility of the franchisee. This clause ensures that Aira Fitness's affiliate can recover losses incurred due to a franchisee's default, while also outlining how the franchisee's financial obligations are handled post-default.