What damages can the Franchisor's Affiliate recover from an Aira Fitness franchisee upon default, and how is the interest rate calculated?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) With or without terminating this Lease, recover from Franchisee damages, not as a penalty, but in an amount equal to the sum of (i) any accrued and all unpaid rent as of the date of entry of judgment in favor of Franchisor's Affiliate plus interest at the rate of eighteen percent (18%) per annum, or the highest amount allowed by law; (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 date of entry of judgment in favor of Franchisor's Affiliate; (iii) all commercially reasonable costs and expenses incurred by Franchisor's Affiliate in any repossession, recovery, storage, repair, sale, re-lease or other disposition of the Equipment including reasonable attorneys' fees and costs incurred in connection therewith or otherwise resulting or arising from Franchisee's default; (iv) present value of the agreed upon or estimated residual value of the Equipment (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 entry of judgment in favor of the Franchisor's Affiliate; and (v) any indemnity, if then determinable, plus interest at eighteen percent (18%) per annum, or the highest amount allowed by law;
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
According to the 2025 Aira Fitness Franchise Disclosure Document, if a franchisee defaults on their lease agreement, the Franchisor's Affiliate can recover several types of damages. These damages are not considered a penalty but rather compensation for losses incurred due to the franchisee's default.
The damages recoverable include all accrued and unpaid rent as of the date of the judgment, plus interest. The interest rate is set at eighteen percent (18%) per annum, or the highest amount allowed by law, ensuring compliance with applicable legal limits. Additionally, the Franchisor's Affiliate can recover the present value of all future rentals due over the remaining term of the lease. This amount is discounted at a rate equal to the discount rate of the Federal Reserve Bank of Chicago as of the date of the judgment, accounting for the time value of money.
Furthermore, Aira Fitness's affiliate can recover all commercially reasonable costs and expenses related to the repossession, recovery, storage, repair, sale, re-lease, or other disposition of the equipment. This includes reasonable attorneys' fees and costs incurred in connection with the default. The present value of the agreed-upon or estimated residual value of the equipment at the end of the lease term is also recoverable, discounted at the discount rate of the Federal Reserve Bank of Chicago as of the judgment date. Finally, any indemnity, if determinable, plus interest at eighteen percent (18%) per annum, or the highest amount allowed by law, can be recovered. These measures aim to fully compensate the Franchisor's Affiliate for the financial impact of the franchisee's default.