What expenses can the Secured Party include when retaking and selling collateral related to an Aira Fitness franchise?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon the occurrence of an Event of Default, all amounts payable to Secured Party shall become immediately due and payable and Secured Party shall have all the rights and remedies of a secured party under the Uniform Commercial Code as in effect in the state or states in which the Collateral may be located, including, but not limited to, the right to enter upon the Aira Fitness Business peaceably and remove all Collateral. Secured Party shall give Debtor reasonable notice of the time and place of any public or private sale or other intended disposition of all or any particular Collateral, as the case may be. Debtor agrees that the requirement of reasonable notice shall be met if notice is mailed to Debtor at its address first above written not less than five (5) business days prior to the sale or other disposition. Expenses of retaking, holding, preparing for sale, selling or the like, shall include, without limitation, Secured Party's reasonable attorneys' fees and other legal expenses.
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
According to Aira Fitness's 2025 Franchise Disclosure Document, in the event of a default, the secured party can recover expenses related to retaking and selling the collateral. These expenses include the secured party's reasonable attorneys' fees and other legal expenses. This provision applies under the Uniform Commercial Code in the state where the collateral is located.
For a prospective Aira Fitness franchisee, this means that if they default on their obligations under the Franchise Agreement, they may be responsible for covering not only the outstanding amounts owed to Aira Fitness, but also the legal costs Aira Fitness incurs while retaking and selling the assets used as collateral. This could significantly increase the financial burden on the franchisee during a default situation.
The FDD specifies that Aira Fitness must provide the franchisee with reasonable notice of any public or private sale or disposition of the collateral. The agreement considers notice as reasonable if it is mailed to the franchisee at least five business days prior to the sale or disposition. This highlights the importance of franchisees maintaining accurate contact information with Aira Fitness and understanding their rights and obligations in the event of default and collateral seizure.
This clause is typical in franchise agreements, as it protects the franchisor's interests by allowing them to recover costs associated with enforcing their security interest in the franchisee's assets. Franchisees should carefully consider these potential costs and ensure they have a clear understanding of the conditions that could trigger a default and the subsequent actions Aira Fitness may take.