What is the consequence if an Aira Fitness franchisee admits its inability to pay its debts as they mature?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
- 3.1. Definitions. The term "Event of Default" means the occurrence and continuation of any one (1) or more of the following events:
- (a) any failure of Debtor promptly and faithfully to pay, observe and perform, when due, any of the Obligations;
- (b) if Debtor becomes insolvent, commits an act of bankruptcy, files a voluntary petition in bankruptcy, or an involuntary petition in bankruptcy is filed, or a permanent or temporary receiver or trustee for the Aira Fitness Business, or all or substantially all of the Debtor's property, is appointed by any court and such appointment is not actively opposed through legal action, or Debtor makes an assignment or arrangement for the benefit of creditors, or calls a meeting of creditors, or Debtor makes a written statement to the effect that he or it is unable to pay his or its debts as they become due, or a levy of execution is made upon Debtor, or an attachment or lien outstanding with respect to the Aira Fitness Business for thirty (30) days, unless the attachment or lien is being duly contested in good faith by Debtor and Secured Party is advised in writing
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 makes a written statement that they are unable to pay their debts as they become due, it constitutes an 'Event of Default.' This is outlined within the definitions of default in the franchise agreement.
An 'Event of Default' has significant ramifications for the franchisee. The agreement specifies that the franchisee's obligations under the Franchise Agreement are secured. This means Aira Fitness has a security interest in the Franchise Agreement itself, all signs and personal property bearing Aira Fitness marks, and all fitness equipment, other equipment, fixtures, furniture, inventory, and supplies at the Aira Fitness Business.
In practical terms, if a franchisee admits inability to pay debts, Aira Fitness can take action against the collateral to recover what is owed. This could involve seizing assets, terminating the franchise agreement, and taking control of the business. This clause protects Aira Fitness by allowing them to act swiftly to mitigate losses if a franchisee is facing severe financial difficulties.