Does the Aira Fitness franchisee's obligation to pay liquidated damages for a lost Pod depend on insurance coverage?
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 Aira Fitness's 2025 Franchise Disclosure Document, a franchisee's obligation to pay for loss or damage to the Pod (the fitness equipment) is not contingent on insurance coverage. Even if the franchisee has insurance, they are still responsible for either repairing, replacing, or paying the liquidated value of the Pod, although they will receive credit for any insurance payments made.
Specifically, the franchisee assumes the risk of loss or damage to the Pod from the moment it ships or the purchase order is confirmed. This responsibility remains regardless of the cause of the damage. The franchisee's obligations under the lease continue in full force and effect, irrespective of any loss or damage.
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 a similar one, or pay a liquidated amount. This amount includes accrued and unpaid rent, the present value of future rentals, the present value of the residual value of the equipment, and any other amounts owed under the lease. The franchisee is entitled to any excess insurance proceeds after Aira Fitness's affiliate receives full payment.