Does a default under the Aira Fitness Development Agreement automatically constitute a default under any individual Franchise Agreement?

According to the 2025 Aira Fitness Franchise Disclosure Document, a default under the Development Agreement does not automatically constitute a default under any individual Franchise Agreement between the parties. The FDD specifies that each Franchise Agreement is independent of the Development Agreement. This means that the agreements operate separately, and failure to comply with one does not automatically trigger a breach of the other.

This separation provides a level of protection for Aira Fitness franchisees. If a franchisee encounters difficulties under the Development Agreement, such as failing to meet development deadlines, their existing Franchise Agreements remain in effect as long as they comply with the terms of those individual agreements. Conversely, any issues with an individual franchise location should not automatically jeopardize the entire Development Agreement, provided the developer meets its obligations under that agreement.

The terms and conditions of each Franchise Agreement must be complied with by the franchisee, and these terms will determine whether a default exists under that specific Franchise Agreement. This clause emphasizes the importance of adhering to the specific terms outlined in each Franchise Agreement, as these agreements are the primary determinants of compliance and potential default. Franchisees should carefully review and understand the terms of both the Development Agreement and each individual Franchise Agreement to ensure they meet all obligations and avoid potential defaults.

However, the Aira Fitness FDD also states that if the developer is in default under any individual Franchise Agreement, it will constitute a default under the Development Agreement. This creates an exception to the general rule that a default under the Development Agreement does not constitute a default under the Franchise Agreement. Therefore, while the agreements are designed to be independent, a default under the Franchise Agreement can trigger consequences under the Development Agreement.