What happens if an Aira Fitness inspection or audit discloses an understatement of Gross Sales?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Immediate Termination With No Opportunity to Cure.
In the event any of the following defaults occurs, you will have no right or opportunity to cure the default and this Agreement will terminate effective immediately on our issuance of written notice of termination: (i) you have failed to identify a mutually acceptable site for the operation of the Aira Fitness Business or to open the Aira Fitness Business for business within the time period provided by this Agreement; (ii) you or any Owner has made any material misrepresentation or omission in your franchise application or any other report to us; (iii) your voluntary abandonment of this Agreement or the Authorized Location, (iv) the loss of your lease, or the failure to timely cure a default under the lease, (v) the loss of your right of possession or failure to reopen or relocate under Section 5.G.; (vi) the closing of the Aira Fitness Business by any state or local authorities for health or public safety reasons; (vii) any unauthorized use of the Confidential Information; (viii) voluntary or involuntary bankruptcy by or against you or any Owner or guarantor, insolvency, making an assignment for the benefit of creditors or any similar voluntary or involuntary arrangement for the disposition of assets for the benefit of creditors; (ix) conviction of you, any Owners, or guarantors of (or pleading no contest to) any felony or misdemeanor that brings or tends to bring any of the Marks into disrepute or impairs or tends to impair your reputation or the goodwill of the Marks or the Aira Fitness Business, (x) you, any Owner, guarantor or an affiliate of any of you are listed by the United States or United Nations as being a terrorist, financier of terrorism or otherwise restricted from doing business in or with the United States; (xi) intentionally underreport membership sales or Gross Sales, falsify financial data, or otherwise commit 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., (xii) any unauthorized transfer or assignment in violation of Section 12; (xiii) your failure to use the approved payment processor, (xiv) you failed to meet the Minimum Membership Requirement for six (6) consecutive months, (xv) you failed to meet the Minimum Monthly Gross Sales Requirement for six (6) consecutive months, or *(xv)*any default by you that is the second same or similar default within any 12 month consecutive period or the third default of any type within any 24-month consecutive period.
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
According to Aira Fitness's 2025 Franchise Disclosure Document, if an inspection or audit reveals an understatement of Gross Sales, the franchisee must pay Aira Fitness the Royalties, National Marketing Fees, and other fees, plus interest and late fees, due on the understated amount. This payment is due within ten days of receiving the inspection or audit report.
Furthermore, if the audit was necessary because the franchisee failed to furnish required reports, financial statements, or tax returns, or if the understatement of Gross Sales is greater than two percent, the franchisee must reimburse Aira Fitness for the cost of the inspection or audit. This reimbursement includes charges from attorneys and independent accountants, as well as travel expenses, room and board, and compensation for Aira Fitness's employees or agents. Aira Fitness also has the right to require the franchisee to provide financial statements prepared by an independent certified public accountant at the franchisee's expense.
Additionally, the franchisee will pay for all inspection and audit costs if they fail to produce their books and records during the inspection and audit, provided Aira Fitness gave at least five days' notice before the scheduled date. 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., will result in immediate termination with no opportunity to cure.