If an Aira Fitness franchisee enters into any composition or arrangement with creditors, is that an event of default?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
ed at, located on or affixed to the Aira Fitness Business operated by Debtor, and all fitness equipment, other equipment, fixtures, furniture, inventory and supplies located at Debtor Aira Fitness Business, whether now owned or hereafter acquired by Debtor (the "Collateral").
3. Default.
- 3.1. Definitions. The term "Event of Default" means the occurrence and continuation of any one (1) or more of the following events:
- (a) any failure of Debtor promptly and faithfully to pay, observe and perform, when due, any of the Obligations;
- (b) if Debtor becomes insolvent, commits an act of bankruptcy, files a voluntary petition in bankruptcy, or an involuntary petition in bankruptcy is filed, or a permanent or temporary receiver or trustee for the Aira Fitness Business, or all or substantially all of the Debtor's property, is appointed by any court and such appointment is not actively opposed through legal action, or Debtor makes an assignment or arrangement for the benefit of creditors, or calls a meeting of creditors, or Debtor makes a written statement to the effect that he or it is
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
According to the 2025 Aira Fitness Franchise Disclosure Document, if a franchisee makes an arrangement for the benefit of creditors, it can trigger an event of default. Specifically, if the franchisee makes an assignment or arrangement for the benefit of creditors, this constitutes an event of default.
This event of default has significant implications. Aira Fitness could potentially terminate the franchise agreement immediately upon written notice, without providing an opportunity to cure the default. This means the franchisee could lose their business and investment if they enter into such an arrangement.
This type of clause is relatively standard in franchise agreements, as franchisors want to protect their brand and ensure financial stability among their franchisees. Franchisees should be aware of this clause and carefully manage their finances to avoid such a situation. It is advisable to seek legal counsel to fully understand the implications of this clause before signing the franchise agreement.