Does a change in the percentage of ownership by an Owner in the franchisee entity constitute a transfer of the Aira Fitness franchise?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
A. Transfers. We have entered into this Agreement with specific reliance upon your financial qualifications, experience, skills and managerial qualifications as being essential to the satisfactory operation of the Aira Fitness Business. Consequently, your interest in this Agreement or in the Aira Fitness Business, or all or substantially all of the assets of the Aira Fitness Business, or any Owner's interest in a franchisee that is a partnership or entity may be transferred or assigned to or assumed by any other person or entity (the "transferee"), in whole or in part, unless you have first tendered to us the right of first refusal to acquire this Agreement in accordance with Section 12.E , and if we do not exercise such right, unless our prior written consent is obtained, the transfer fee provided for in Section 12.C is paid, if applicable, and the transfer conditions described in Section 12.C are satisfied. Any sale (including installment sale), lease, pledge, management agreement, contract for deed, option agreement, assignment, bequest, gift or otherwise, or any arrangement pursuant to which you turn over all or part of the daily operation of the business to a person or entity who shares in the losses or profits of the business in a manner other than as an employee will be considered a transfer for purposes of this Agreement. Specifically, but without limiting the generality of the foregoing, the following events constitute a transfer and you must comply with the right of first refusal, consent, transfer fee, and other transfer conditions in this Section 12:
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- Any change or series of changes in the percentage of the franchisee entity owned, directly or indirectly, by the Owner (including any addition or deletion of any person or entity who qualifies as an Owner);
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
According to the 2025 Aira Fitness Franchise Disclosure Document, a change in the percentage of ownership in the franchisee entity by an Owner does constitute a transfer of the Aira Fitness franchise. Specifically, any change or series of changes in the percentage of the franchisee entity owned, directly or indirectly, by the Owner (including any addition or deletion of any person or entity who qualifies as an Owner) is considered a transfer. This means that if the ownership structure of the franchisee changes, even if the original franchisee retains some ownership, it is treated as a transfer under the franchise agreement.
This has significant implications for Aira Fitness franchisees. It means that franchisees cannot freely change the ownership structure of their business without the franchisor's consent. Aira Fitness retains the right of first refusal to acquire the franchise agreement. If Aira Fitness does not exercise this right, the franchisee must obtain Aira Fitness's prior written consent, pay a transfer fee, and satisfy other transfer conditions. These conditions are designed to ensure that any new owner meets Aira Fitness's standards and that the transfer does not negatively impact the Aira Fitness brand or other franchisees.
The transfer fee depends on whether the transferee is an existing Aira Fitness franchisee. If the transferee is an existing franchisee, the transfer fee is $5,000. If the transferee is not an existing franchisee, the transfer fee is equal to Aira Fitness's then-current initial franchise fee. Additionally, if the transfer results in a change of control of the franchisee, the transferee must execute Aira Fitness's then-current form of franchise agreement. Aira Fitness also has the right to modify the boundaries of the Designated Area under the new franchise agreement.
These transfer provisions are typical in franchising, as franchisors want to maintain control over who operates their branded businesses. Prospective Aira Fitness franchisees should carefully consider these transfer restrictions and discuss them with Aira Fitness before entering into a franchise agreement. Understanding the conditions under which a transfer can occur, the associated costs, and the franchisor's rights is crucial for making an informed decision about investing in an Aira Fitness franchise.