If Aira Fitness accepts the assignment of Membership Contracts, does Aira Fitness assume liability for monies owed or other liabilities relating to the Membership Contracts that accrued before the assignment's effective date?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
- Assignment. In the event of expiration or termination of the Franchise Agreement, and in order to secure continuity and stability of the operation of the Aira Fitness Business, Franchisee hereby sells, assigns, transfers and conveys to the Aira Fitness all of its rights, title and interest in and to all Membership Contracts; provided, however, such Assignment will not be effective unless and until the Franchise Agreement has expired or is terminated in accordance with the provisions thereof and Aira Fitness has delivered to Franchisee written notice of its acceptance of the assignment. In the event of such assignment, AIRA Fitness will assume no liability for monies owed or other liabilities relating to the Membership Contracts that have accrued prior to the effective date of the assignment.
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
According to Aira Fitness's 2025 Franchise Disclosure Document, if the Franchise Agreement expires or is terminated and Aira Fitness provides written notice of its acceptance of the assignment of Membership Contracts, Aira Fitness will not assume liability for any monies owed or other liabilities related to the Membership Contracts that accrued before the assignment's effective date. This means that the franchisee remains responsible for financial obligations to members that arose before Aira Fitness takes over the contracts.
This provision protects Aira Fitness from pre-existing financial issues related to the memberships when a franchise location closes. It also makes it crucial for prospective franchisees to understand their responsibilities for managing membership contracts and finances, as they will be liable for any outstanding obligations up to the point of assignment.
For a prospective franchisee, this highlights the importance of maintaining accurate financial records and fulfilling all obligations to members. It also underscores the need to understand the terms of the Membership Contract Assignment Agreement, as the franchisee will be required to execute this agreement. This clause is fairly standard in franchise agreements, as it protects the franchisor from liabilities created by the franchisee.