Is an Aira Fitness franchisee allowed to withhold payment of any amounts owed to the franchisor?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
Based on the 2025 Aira Fitness Franchise Disclosure Document, franchisees are generally not permitted to withhold payments owed to Aira Fitness. The FDD outlines specific payment obligations and mechanisms, including deductions from the franchisee's merchant account for various fees.
Specifically, Aira Fitness is authorized to debit the franchisee's merchant account for royalty fees, national marketing fund contributions, website fees, yearly maintenance fees, interest, late fees, and any other amounts owed under the Franchise Agreement. The dollar amount debited can vary, and Aira Fitness typically initiates these debits monthly. If the merchant account lacks sufficient funds, Aira Fitness is entitled to collect interest and late fees and debit them when funds are available.
Furthermore, the franchisee is responsible for all costs or fees charged by the approved payment processor related to these debits. The franchisee authorizes these debit practices, indicating a lack of explicit allowance to withhold payments. The security agreement also specifies that the franchisee's obligations under the Franchise Agreement are secured, meaning failure to pay could result in Aira Fitness claiming the collateral.
While the excerpts provided do not explicitly state that a franchisee CANNOT withhold payments under any circumstances, the comprehensive system of automated debits and the security interest granted to Aira Fitness strongly suggest that withholding payment would be a breach of the Franchise Agreement. A prospective franchisee should seek clarification from Aira Fitness regarding any potential scenarios where withholding payment might be permissible or what recourse is available in cases of legitimate disputes over fees.