How will the franchise fee be released proportionally for each Aira Fitness franchise outlet opened under the Multi-Unit Development Agreement?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
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- In lieu of an impound of franchise fees, the Franchisor will not require or accept the payment of any initial franchise fees until the franchisee has (a) received all pre-opening and initial training obligations that it is entitled to under the franchise agreement or offering circular, and (b) is open for business. Because franchisor has material pre-opening obligations with respect to each franchised business Franchisee opens under the Multi- Unit Development Agreement, payment of the franchise fee will be released proportionally with respect to each franchise outlet opened and until franchisor has met all its pre-opening obligations under the Agreement and Franchisee is open for business with respect to each such location.
Source: Item 17 — **RENEWAL, TERMINATION,TRANSFER AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 48–54)
What This Means (2025 FDD)
According to the 2025 Aira Fitness Franchise Disclosure Document, the franchise fee payment under a Multi-Unit Development Agreement is tied to Aira Fitness fulfilling its pre-opening obligations and the franchisee opening for business. Specifically, the franchise fee will be released proportionally for each franchise outlet as it opens. This means that the franchisee doesn't have to pay the entire franchise fee upfront. Instead, the payment is divided and released incrementally as each Aira Fitness location is opened and operational.
This arrangement benefits the franchisee by reducing the initial financial burden. Instead of paying a large sum upfront, the franchisee can spread the payments over time as each location begins generating revenue. This can significantly improve cash flow during the initial stages of development. It also incentivizes Aira Fitness to provide timely and effective pre-opening support, as their payment is directly linked to the successful launch of each franchise location.
However, it's important for prospective Aira Fitness franchisees to understand exactly what constitutes "pre-opening obligations" and how the proportional release of fees is calculated. The Franchise Agreement should clearly define these obligations and the payment schedule for each outlet. Franchisees should also confirm that the proportional release of fees is tied to objective milestones (e.g., lease signed, permits obtained, training completed) to avoid any ambiguity or disputes.
This proportional release of franchise fees is not standard across all franchise systems. Many franchisors require the entire franchise fee to be paid upfront. The Aira Fitness approach can be seen as a more franchisee-friendly model, but it's crucial to carefully review the specific terms and conditions outlined in the Franchise Agreement and related addenda to fully understand the financial implications.