How is the present value of the residual value of the Pod calculated for Aira Fitness?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
(C) the present value of the agreed upon or estimated residual value of the Pod as of the expiration of this Lease or any renewal thereof discounted at a rate equal to the discount rate of the Federal Reserve Bank of Chicago as of the Date of Loss;
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
According to Aira Fitness's 2025 Franchise Disclosure Document, the present value of the residual value of the Pod is calculated to determine payments required if the Pod is lost, stolen, damaged, or destroyed. The calculation involves discounting the agreed-upon or estimated residual value of the Pod as of the lease's expiration date (or any renewal thereof).
The discount rate used in this calculation is equal to the discount rate of the Federal Reserve Bank of Chicago as of the date the loss occurred. This present value, along with other factors, determines the total amount the franchisee owes in the event of loss or damage to the Pod.
This clause protects Aira Fitness's affiliate (the lessor) by ensuring they are compensated for the remaining value of the Pod, considering the time value of money. For a prospective franchisee, this means understanding the potential financial implications if the leased Pod is compromised, as they would be responsible for covering the present value of its residual worth, discounted according to the specified method.