What happens if the Aira Fitness franchisee's understatement of Gross Sales is greater than 2%?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
ss at any time to inspect and audit your business operations, records, and reports. For purposes of this inspection and audit, records and reports exclude your employment records for your employees. In the event any such inspection or audit shall disclose an understatement of the Gross Sales of the Aira Fitness Business for any period, you shall pay to us within ten (10) days after receipt of the inspection or the audit report, the Royalties, the National Marketing Fees, and other fees plus interest and late fees due on the amount of the understatement. Further, if the audit is made necessary by your failure to furnish reports, financial statements, tax returns or schedules as herein required, or if an understatement of Gross Sales for any period is determined by any such inspection or audit to be greater than two percent (2%), you shall reimburse usfor the cost of such inspection or audit including, without limitation, the charges of attorneys and independent accountants and the travel expenses, room and board, and compensation of our employees or agents, and we shall have the right to require you to furnish, at your sole cost and expense, financial statements prepared by an independent certified public accountant thereafter. In addition, you shall pay for all costs, as specified above, of the inspection and audit if your books and records are not produced at the time of the inspection and audit, provided that we notified you at least five (5) days prior to the scheduled inspection and audit date. We shall have the right to review the operation and administration of the Aira Fitness Business by quality control testing, periodic field reviews and such other tests, reviews and inspections and other reasonable actions deemed desirable by us.
- D.
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
According to Aira Fitness's 2025 Franchise Disclosure Document, if an audit reveals that a franchisee has understated their Gross Sales by more than 2%, the franchisee is responsible for covering the expenses associated with the audit. These costs include attorney fees, independent accountant charges, travel expenses, room and board, and compensation for Aira Fitness employees or agents involved in the audit.
In addition to covering the audit costs, the franchisee must also pay the Royalties, National Marketing Fees, and other fees, along with interest and late fees, on the amount that was initially understated. This ensures that Aira Fitness receives the correct payments that were due based on the actual Gross Sales figures.
Furthermore, Aira Fitness has the right to demand that the franchisee provide financial statements prepared by an independent certified public accountant at the franchisee's expense from that point forward. This measure aims to ensure greater accuracy and transparency in financial reporting. Intentionally underreporting membership sales or Gross Sales, falsifying financial data, or otherwise committing an act of fraud with respect to your acquisition of this franchise or your rights or obligations under this Agreement, or any understatement or 2% variance on a subsequent audit within a two- year period under Section 10.C. can result in immediate termination with no opportunity to cure.