If an Aira Fitness franchisee makes a general assignment for the benefit of creditors, is that an event of default?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
7.2 You shall be in default under this Agreement, and all rights granted herein to you shall automatically terminate without notice or an opportunity to cure if:
- (a) you are adjudicated bankrupt, become insolvent, commits any affirmative action of insolvency or files any action or petition of insolvency, or if a receiver (permanent or temporary) of your property or any part thereof is appointed by a court of competent authority, or if you make a general assignment for the benefit of its creditors;
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 a general assignment for the benefit of creditors, it can be considered an event of default that may lead to termination of the franchise agreement. Specifically, under Section 7.2 of the Development Agreement, such an action results in automatic termination without notice or opportunity to cure.
This means that if an Aira Fitness franchisee faces financial difficulties and assigns their assets to a creditor for the benefit of all creditors, Aira Fitness has the right to immediately terminate the franchise agreement. The franchisee would not have an opportunity to rectify the situation or negotiate terms to continue operating.
This clause protects Aira Fitness from potential financial instability or damage to its brand reputation that could arise from a franchisee's insolvency. However, it also places a significant risk on the franchisee, as any financial distress leading to assignment of assets could result in the immediate loss of their franchise. Prospective franchisees should carefully consider this clause and its implications for their business and personal financial planning.