Does the Franchisor's Affiliate have an obligation to dispose of the Pod after an Aira Fitness franchisee's Event of Default?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) If Franchisor's Affiliate decides, in its sole discretion, not to take possession of the Pod, Franchisor's Affiliate continues to be the owner of the Pod and may, but is not obligated to, dispose of the Pod by sale or otherwise, all of which determinations may be made by Franchisor's Affiliate in its sole discretion and for its own account;
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
According to Aira Fitness's 2025 Franchise Disclosure Document, following an Event of Default, Franchisor's Affiliate has the option, but not the obligation, to dispose of the Pod. Specifically, the franchisor's affiliate may choose not to repossess the Pod, maintaining ownership while having the discretion to sell or otherwise dispose of it for their own benefit. This decision rests solely with Franchisor's Affiliate.
An Event of Default can occur if the Aira Fitness franchisee becomes insolvent, bankrupt, or unable to pay debts; applies for a receiver or trustee; files for bankruptcy; suffers a material adverse change in financial condition; or defaults under any agreement with Franchisor's Affiliate. These broad conditions mean an Aira Fitness franchisee's business operations must remain stable to avoid triggering an Event of Default.
This clause protects Franchisor's Affiliate by granting them flexibility in handling the Pod after a default. They can choose the most economically advantageous option, whether it's selling the Pod, leasing it to another franchisee, or another method of disposal. However, the franchisee should be aware that they lose control over the Pod's disposition once an Event of Default occurs, and Franchisor's Affiliate is not obligated to act in the franchisee's best interest during the disposal process.