What is the Aira Fitness franchisee required to furnish to the Franchisor's Affiliate as proof of insurance?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
(b) Insurance. Franchisee shall obtain and maintain for the entire term of this Lease, at its own expense (as primary insurance for Franchisor's Affiliate and Franchisee), property damage and liability insurance and insurance against loss or damage to the Equipment including, without limitation, loss by fire (including so-called extended coverage), theft, collision and such other risks of loss as are customarily insured against on the type of Equipment leased hereunder and by businesses in which Franchisee is engaged, in such amounts, in such form and with such insurers as shall be reasonably satisfactory to Franchisor's Affiliate provided, however, that the amount of insurance against loss or damage to the Equipment shall be the replacement value of the Equipment. Each insurance policy will name Franchisee as an insured and Franchisor's Affiliate as an additional insured and loss payee thereof as Franchisor's Affiliate's interests may appear, shall contain cross-liability endorsements and shall contain a clause requiring the insurer to give Franchisor's Affiliate at least 30 days prior written notice of any material alteration in the terms of such policy or of the cancellation thereof. Franchisee shall furnish to Franchisor's Affiliate a certificate of insurance or other evidence satisfactory to Franchisor's Affiliate that such insurance coverage is in effect, provided, however, that Franchisor's Affiliate shall be under no duty either to ascertain the existence of or to examine such insurance policy or to advise Franchisee in the event such insurance coverage shall not comply with the requirements hereof. Franchisee further agrees to give Franchisor's Affiliate prompt notice of any damage to, or loss of, the Equipment, or any part thereof; all insurance covering loss or damage to the Equipment shall contain a breach of warranty clause satisfactory to Franchisor's Affiliate. In the event Franchisee fails to obtain insurance in accordance with this provision, the Franchisor's Affiliate may, at its option, obtain the insurance or declare Franchisee's failure an event of default. In the event that Franchisor's Affiliate obtains insurance, it shall be entitled to prompt reimbursement from the Franchisee of the costs, including reasonable administrative costs, of doing so.
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
According to Aira Fitness's 2025 Franchise Disclosure Document, franchisees must secure and maintain property damage and liability insurance for the duration of their lease. This insurance should cover potential losses or damage to equipment, including risks like fire, theft, and collision. The insurance coverage must be considered primary insurance for both the Franchisor's Affiliate and the franchisee.
The required insurance amount should be sufficient to cover the replacement value of the equipment. The insurance policy must list the franchisee as an insured party and the Franchisor's Affiliate as an additional insured and loss payee, ensuring the affiliate's interests are protected. The policy should also include cross-liability endorsements and a clause mandating the insurer to provide the Franchisor's Affiliate with a minimum of 30 days' written notice before any significant changes to the policy terms or cancellation.
To demonstrate compliance, the Aira Fitness franchisee must furnish the Franchisor's Affiliate with either a certificate of insurance or other evidence that confirms the insurance coverage is active and meets the specified requirements. However, the Franchisor's Affiliate is not obligated to verify the existence or compliance of the insurance policy, nor are they required to advise the franchisee if the coverage is inadequate. The franchisee is also responsible for promptly notifying the Franchisor's Affiliate of any damage to or loss of the equipment.
If a franchisee fails to obtain the necessary insurance, the Franchisor's Affiliate has the option to either secure the insurance themselves or declare the franchisee in default. Should the Franchisor's Affiliate obtain the insurance, the franchisee is obligated to promptly reimburse them for all associated costs, including reasonable administrative fees.