Can the Franchisor's Affiliate declare all sums due for the full term of the lease immediately payable upon an event of default by an Aira Fitness franchisee?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
(c) Declare immediately due and payable all sums due and to become due hereunder for the full term of the Lease (including any renewal or purchase options which Franchisee has contracted to pay);
(d) With or without terminating this Lease, recover from Franchisee damages, not as a penalty, but in an amount equal to the sum of (i) any accrued and all unpaid rent as of the date of entry of judgment in favor of Franchisor's Affiliate plus interest at the rate of eighteen percent (18%) per annum, or the highest amount allowed by law; (ii) the present
value of all future rentals reserved in the Lease and contracted to be paid over the unexpired term of the Lease discounted at a rate equal to the discount rate of the Federal Reserve Bank of Chicago as of the date of entry of judgment in favor of Franchisor's Affiliate; (iii) all commercially reasonable costs and expenses incurred by Franchisor's Affiliate in any repossession, recovery, storage, repair, sale, re-lease or other disposition of the Pod including reasonable attorneys' fees and costs incurred in connection therewith or otherwise resulting or arising from Franchisee's default; (iv) present value of the agreed upon or estimated residual value of the Pod (as of the expiration of this Lease or any renewal thereof) discounted at a rate equal to the discount rate of the Federal Reserve Bank of Chicago as of the date of entry of judgment in favor of the Franchisor's Affiliate; and (v) any indemnity, if then determinable, plus interest at eighteen percent (18%) per annum, or the highest amount allowed by law;
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
According to Aira Fitness's 2025 Franchise Disclosure Document, if an Aira Fitness franchisee defaults on their lease agreement, the Franchisor's Affiliate has the right to declare all sums due for the entire lease term immediately payable. This includes any renewal or purchase options the franchisee has agreed to pay.
In addition to declaring all sums immediately due, the Franchisor's Affiliate can recover damages from the franchisee. These damages are not considered a penalty but are calculated to include several factors. This calculation includes any accrued and unpaid rent as of the judgment date, along with an interest rate of eighteen percent (18%) per annum or the highest amount allowed by law. It also factors in the present value of all future rentals reserved in the lease over the unexpired term, discounted at the rate of the Federal Reserve Bank of Chicago at the time of judgment.
Furthermore, the damages include all commercially reasonable costs and expenses incurred by the Franchisor's Affiliate in the repossession, recovery, storage, repair, sale, re-lease, or other disposition of the Pod, including reasonable attorney's fees and costs. The present value of the agreed-upon or estimated residual value of the Pod at the lease's expiration, discounted at the rate of the Federal Reserve Bank of Chicago as of the judgment date, is also included. Finally, any indemnity, if determinable, plus interest at eighteen percent (18%) per annum, or the highest amount allowed by law, is added to the damages.
This clause highlights a significant financial risk for Aira Fitness franchisees. A default can trigger immediate and substantial financial obligations, potentially leading to severe financial consequences. Prospective franchisees should carefully consider this provision and seek legal counsel to fully understand the implications of defaulting on the lease agreement.