What constitutes permitting a judgment or other claim to become a lien upon any of the Aira Fitness franchisee's assets that would trigger an Event of Default?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
Debtor (the "Collateral").
3. Default.
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
- (c) if Debtor loses possession or the right of possession of all or a significant part of the Aira Fitness Business through condemnation or casualty and the Aira Fitness Business is not relocated or reopened as required by the Franchise Agreement;
(d) if Debtor abandons, surrenders or transfers control of the operation of the Aira Fitness Business without Secured Party's prior written consent;
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
According to Aira Fitness's 2025 Franchise Disclosure Document, an Event of Default can be triggered if an attachment or lien remains outstanding with respect to the Aira Fitness Business for thirty (30) days. However, this is not considered an Event of Default if the franchisee is actively contesting the attachment or lien in good faith and has advised the Secured Party (presumably Aira Fitness) in writing.
Additionally, if a final judgment against the franchisee's business assets remains unsatisfied of record for thirty (30) days or longer, this also constitutes a default, unless a supersedeas bond is filed. Similarly, if a suit to foreclose any lien or mortgage against the franchisee's premises or business assets is instituted and not dismissed within thirty (30) days, or is not in the process of being dismissed, it also constitutes a default. Aira Fitness reserves the right to be named as trustee or receiver in any voluntary petition for bankruptcy or insolvency filed by the franchisee.
These provisions are typical in franchise agreements to protect the franchisor's brand and interests. Franchisees should be aware of these conditions and ensure they manage their business finances and legal matters diligently to avoid triggering an Event of Default, which could lead to termination of the franchise agreement.