What discount rate is used to calculate the present value of future rentals for a lost or damaged Aira Fitness Pod?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
date the loss, theft, damage or destruction occurred ("Date of Loss") plus interest at the rate of eighteen percent (18%) per annum or the highest rate allowed by law; (B) 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 Loss; (C) the present value of the agreed upon or estimated residual value of the Pod 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 Loss; and (D) any other amount otherwise then due and owing under the Lease or which otherwise will become due and owing irrespective of the fact that the Pod has been damaged, destroyed, lost or stolen including any additional taxes or other charges that may otherwise arise by reason of the damage, destruction, loss or theft of the Pod. Upon Franchisor's Affiliate's receipt of such payment, Franchisee shall be entitled to the proceeds of any recovery in respect of any such item of Pod from insurance or otherwise to the extent that any excess shall be retained by Franchisor's Affiliate.
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
According to Aira Fitness's 2025 Franchise Disclosure Document, the discount rate used to calculate the present value of all future rentals for a lost or damaged Aira Fitness Pod is the discount rate of the Federal Reserve Bank of Chicago as of the date the loss occurred. This applies when calculating what the franchisee owes due to the loss, theft, damage, or destruction of a Pod.
This means that if an Aira Fitness franchisee's Pod is lost, stolen, damaged, or destroyed, the franchisee will be responsible for the present value of the remaining rentals. The present value calculation uses the Federal Reserve Bank of Chicago's discount rate at the time of the loss. This rate is used to discount the future rental payments to their present-day value.
This clause protects Aira Fitness by ensuring they are compensated for the lost future income from the damaged or lost Pod. For a franchisee, this means they could face a significant financial obligation if something happens to the Pod, as they are responsible for not only the cost of the lost or damaged equipment but also the present value of the future rental income that Aira Fitness will lose. Franchisees should understand this potential liability and ensure they have adequate insurance coverage.