Can the Franchisor's Affiliate sell the Pod after an Aira Fitness franchisee's Event of Default?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
- (f) In its sole discretion, re-lease or sell any or all of the Pod at a public or private sale on such terms and notice as Franchisor's Affiliate shall deem reasonable (such sale may, at Franchisor's Affiliate's sole option, be conducted at Franchisee's premises), and recover from Franchisee damages, not as a penalty, but herein liquidated for all purposes and in an amount equal to the sum of (i) any accrued and all unpaid rent as of the later of (A) the date of default or (B) the date that Franchisor's Affiliate has obtained possession of the Pod or such other date as Franchisee has made an effective tender of possession of the Pod back to Franchisor's Affiliate ("Default Date"), plus interest at the rate of eighteen percent (18%) per annum; (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 Default Date plus interest on said sum at the rate of eighteen percent (18%) per annum until paid; (iii) all commercially reasonable costs and expenses incurred by Franchisor's Affiliate in any repossession, recovery, storage, repair, sale, release or other disposition of the Pod including reasonable attorneys' fees and costs incurred in connection with or otherwise resulting from the 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 Default; and (v) any indemnity, if then determinable, plus interest at eighteen percent (18%) per annum, LESS the amount received by Franchisor's Affiliate upon such public or private sale or re-lease of such items of Pod, if any;
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
According to Aira Fitness's 2025 Franchise Disclosure Document, if an Event of Default occurs, Franchisor's Affiliate has the right to sell the Pod. Specifically, the franchisor's affiliate can re-lease or sell the Pod at a public or private sale, determining the terms and notice as they deem reasonable. This sale can even occur at the franchisee's premises, at the Franchisor's Affiliate's sole option.
In the event of a sale after default, Aira Fitness's Franchisor's Affiliate is entitled to recover damages from the franchisee. These damages are calculated to include accrued and unpaid rent up to the Default Date (the later of the default date or the date Franchisor's Affiliate obtains possession of the Pod), plus interest at 18% per annum. It also includes the present value of all future rentals over the unexpired lease term, discounted at the Federal Reserve Bank of Chicago's discount rate as of the Default Date, plus 18% interest.
Additional recoverable costs for Aira Fitness include commercially reasonable expenses for repossession, storage, repair, sale, or release of the Pod, including attorney's fees, and the present value of the Pod's residual value at lease expiration, discounted at the Federal Reserve Bank of Chicago's rate. Any indemnity amounts, plus 18% interest, are also included. These amounts are offset by any proceeds Franchisor's Affiliate receives from the sale or re-lease of the Pod.
This clause highlights the significant financial risks for an Aira Fitness franchisee who defaults on their lease agreement. The franchisee is responsible for covering not only the outstanding rent and associated costs but also potential losses incurred by the Franchisor's Affiliate in reselling or re-leasing the Pod. The franchisee also waives rights and remedies conferred upon a franchisee by sections 2A-508 through 12A-522 of the UCC.