Is a franchisee allowed to withhold payment of any amounts due to Aira Fitness?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
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| Address | Address | |---------------------------|---------------------------| | City | City | | State | State | | Zip Code | Zip Code |
Attachment D to the Franchise Agreement
MERCHANT ACCOUNT AUTHORIZATION
As a duly authorized signer on the Merchant Account, I authorize Aira Fitness Franchising, LLC ("Company") to initiate monthly Merchant Account debits for payments due or when applicable, apply Merchant Account credits to the same. Said debits may be for Royalty Fees, National Marketing Fund contributions, website fees, yearly maintenance fees, interest, late fees, and any other amounts Franchisee owes to the Company or its affiliates pursuant to the Franchise Agreement between Franchisee and Company, and in amounts required by the Franchise Agreement. The dollar amount to be debited for each debit will vary.
Currently, Company is initiating monthly debits on the first day of every calendar week for payment of the Royalty Fees, National Marketing Fund contributions, website fees, yearly maintenance fees, interest, late fees, and any other amounts then due, unless that day falls on a holiday, in which case the debit will be initiated the following business day. The dates and intervals for initiating debits for amounts due under the Franchise Agreement may be changed upon delivery of notice to Franchisee.
If, at the time of any debit, the Merchant Account does not contain sufficient credit for all amounts then due (Non-Sufficient or Uncollected Funds), I understand that Company shall be entitled to collect interest and late fees as provided in the Franchise Agreement, and to debit same from the Merchant Account once there are sufficient funds to cover it.
Franchisee is responsible for, and shall pay on demand, all costs or fee charged by the Approved Payment Processor holding the account relating to the handling of debits pursuant to this authorization. I understand and authorize all of the above.
| FRANCHISEE: | | |---------------------------------|--| | AUTHORIZING | | | SIGNATURE: | | | | | | PRINT NAME | | | AND | | | TITLE: | | | | | | DATE: | | | BUSINESS | | | ADDRESS: | | | | |
Attachment E to the Franchise Agreement LEASE ADDENDUM
| This | Lease Addendum ("Addendum") dated , 20 , is entered into between |
|---|---|
| ("Landlord"), and | |
| ("Tenant"). |
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
According to Aira Fitness's 2025 Franchise Disclosure Document, franchisees are generally expected to make all payments due to Aira Fitness and its affiliates. The FDD outlines several scenarios and mechanisms to ensure timely payments. Aira Fitness is authorized to deduct payments from the franchisee's merchant account for various fees, including royalty fees, national marketing fund contributions, website fees, yearly maintenance fees, interest, and late fees. The franchisee must maintain a sufficient balance in their merchant account to cover these deductions. If the account lacks sufficient funds, Aira Fitness is entitled to collect interest and late fees. Franchisees are responsible for any costs or fees charged by the payment processor related to these debits.
Furthermore, Aira Fitness has the right to estimate a franchisee's gross sales if they fail to report them on time and withdraw any unpaid royalties, national marketing fees, or other amounts due through the approved payment processor. Aira Fitness also has audit rights, allowing their representatives to inspect the franchisee's business operations, records, and reports. If an audit reveals an understatement of gross sales, the franchisee must pay the owed royalties, national marketing fees, and other fees, along with interest and late fees, within ten days of receiving the audit report.
While the FDD does not explicitly state that a franchisee is never allowed to withhold payments, it heavily emphasizes the franchisee's obligation to make timely payments and outlines Aira Fitness's mechanisms to ensure they receive all amounts due. The document does mention a force majeure clause, which could suspend payment obligations under specific, limited circumstances. However, this suspension does not apply to insurance and indemnification obligations, the requirement to obtain a site and open the Aira Fitness Business within a specified period, and the obligation to pay all fees and other amounts due to Aira Fitness and its affiliates. Therefore, withholding payment is not generally permitted and could lead to penalties, interest, and potentially termination of the franchise agreement.