When does the franchisee assume the risk of loss for the Pod under the Aira Fitness lease agreement?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
(a) Risk of Loss. From the date the Supplier ships the Pod to Franchisee or the date Franchisor's Affiliate confirms Franchisee's purchase order or contract to Supplier, whichever occurs first, Franchisee hereby assumes and shall bear the entire risk of loss for theft, damage, destruction or other injury to the Pod from any and every cause whatsoever. NO SUCH LOSS OR DAMAGE SHALL IMPAIR ANY OBLIGATION OF FRANCHISEE UNDER THIS LEASE WHICH SHALL CONTINUE IN FULL FORCE AND EFFECT. In the event of damage or loss to the Pod (or any part thereof) and irrespective of payment from any insurances coverage maintained by Franchisee, but applying full credit therefor, Franchisee shall at the option of Franchisor's Affiliate, (a) place the Pod in good repair, condition and working order; or (b) replace the Pod (or any part thereof) with like equipment in good repair, condition and working order and transfer clear title to such replacement equipment to Franchisor's Affiliate, whereupon such replacement equipment shall be deemed the Pod for all purposes; or (c) pay to Franchisor's Affiliate, not as a penalty, but herein liquidated for all purposes, an amount equal to the sum of (A) any accrued and unpaid rent as of the
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
According to the 2025 Aira Fitness Franchise Disclosure Document, the franchisee assumes the risk of loss for the Pod (the fitness equipment building) upon the earliest of two events. The risk of loss transfers to the franchisee either when the Supplier ships the Pod or when the Franchisor's Affiliate confirms the franchisee's purchase order or contract to the Supplier. This means the franchisee bears the risk of theft, damage, destruction, or other injury to the Pod from any cause from that point forward.
This assumption of risk has significant implications for an Aira Fitness franchisee. Even if the Pod is damaged or lost, the franchisee's obligations under the lease remain in full force and effect. The franchisee is still obligated to pay rent and fulfill other lease obligations, regardless of the condition of the Pod.
In the event of damage or loss, Aira Fitness's Affiliate has the option to require the franchisee to either repair the Pod, replace it with like equipment (transferring the title to the replacement to the Affiliate), or pay the Affiliate an amount equal to any accrued and unpaid rent. The franchisee is responsible for obtaining and maintaining property damage and liability insurance, including coverage for loss or damage to the Pod, with the Franchisor's Affiliate named as an additional insured and loss payee. This insurance must cover the replacement value of the Pod.