Can the Franchisor's Affiliate release any security for the obligations of Franchisee without notice to Guarantor for Aira Fitness?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor's Affiliate may, from time to time, and without notice to Guarantor, release any security that Franchisor's Affiliate may have for the obligations of Franchisee under the Lease or accept security therefor; add, substitute or release guarantors; or compromise or settle any amount due or owing; or claimed to be owing under the Lease; and no such action by Franchisor's Affiliate or any other action which Franchisor's Affiliate may take or omit in connection with the Lease shall affect this Guaranty or Guarantor's obligations in any way.
Guarantor expressly waives notice of acceptance of this Guaranty and diligence of collecting any sums due under the Lease or the taking of any action with reference to any default under the Lease or to any liability under this Guaranty.
Franchisor's Affiliate has no duty to disclose to Guarantor any information it receives regarding the financial status of Franchisee, whether or not such information indicates that the risk of Guarantor under this Guaranty has been or may be increased. Guarantor assumes full responsibility for being and keeping informed of Franchisee's financial condition, Franchisee's performance under the Lease, and Franchisee's use and operation of the Premises.
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
According to Aira Fitness's 2025 Franchise Disclosure Document, the Franchisor's Affiliate has the right to release any security for the obligations of the franchisee without notifying the guarantor. This means that as a guarantor, you will not be informed if the affiliate takes actions such as releasing security for the franchisee's obligations under the lease.
This lack of notification is significant because it affects the guarantor's ability to assess and manage their risk exposure. The guarantor is essentially kept in the dark about changes to the security related to the franchisee's obligations. This could potentially increase the guarantor's risk if the franchisee's financial situation deteriorates and the security initially in place to cover the obligations is released without the guarantor's knowledge.
Furthermore, the guarantor assumes full responsibility for staying informed about the franchisee's financial condition, their performance under the lease, and their operation of the premises. This places the onus on the guarantor to actively seek out information that the Franchisor's Affiliate is not obligated to provide. This is a notable point for anyone considering acting as a guarantor, as it highlights the need for proactive monitoring and due diligence.
In the context of the Aira Fitness franchise agreement, this clause underscores the importance of carefully evaluating the risks associated with providing a guarantee. Potential guarantors should consider the implications of not being notified about changes to the security and the need to independently monitor the franchisee's financial health and compliance with the lease terms.