What must an Aira Fitness franchisee pay if an audit discloses an understatement of Gross Sales?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
In the event any such inspection or audit shall disclose an understatement of the Gross Sales of the Aira Fitness Business for any period, you shall pay to us within ten (10) days after receipt of the inspection or the audit report, the Royalties, the National Marketing Fees, and other fees plus interest and late fees due on the amount of the understatement.
Further, if the audit is made necessary by your failure to furnish reports, financial statements, tax returns or schedules as herein required, or if an understatement of Gross Sales for any period is determined by any such inspection or audit to be greater than two percent (2%), you shall reimburse usfor the cost of such inspection or audit including, without limitation, the charges of attorneys and independent accountants and the travel expenses, room and board, and compensation of our employees or agents, and we shall have the right to require you to furnish, at your sole cost and expense, financial statements prepared by an independent certified public accountant thereafter.
In addition, you shall pay for all costs, as specified above, of the inspection and audit if your books and records are not produced at the time of the inspection and audit, provided that we notified you at least five (5) days prior to the scheduled inspection and audit date.
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
According to Aira Fitness's 2025 Franchise Disclosure Document, if an inspection or audit reveals that a franchisee has understated their Gross Sales, the franchisee must pay Aira Fitness the Royalties, National Marketing Fees, and other fees due on the understated amount, along with interest and late fees. This payment is due within ten days of receiving the inspection or audit report.
In addition to the fees and interest on the understated Gross Sales, Aira Fitness franchisees may also be responsible for covering the costs of the audit itself under certain conditions. Specifically, if the audit was necessary because the franchisee failed to furnish required reports, financial statements, tax returns, or schedules, or if the understatement of Gross Sales is greater than two percent (2%), the franchisee must reimburse Aira Fitness for the cost of the inspection or audit. This reimbursement includes charges for attorneys and independent accountants, as well as travel expenses, room and board, and compensation for Aira Fitness employees or agents involved in the audit.
Furthermore, the franchisee is responsible for all costs associated with the inspection and audit if their books and records are not produced at the time of the inspection and audit, provided that Aira Fitness gave at least five days' notice prior to the scheduled inspection and audit date. This provision incentivizes franchisees to maintain accurate records and cooperate with audits to avoid additional expenses. The franchisor also has the right to require the franchisee to furnish financial statements prepared by an independent certified public accountant at the franchisee's sole cost and expense thereafter.