What is subtracted from the damages owed to Aira Fitness after the sale or re-lease of the Pod?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
- (f) In its sole discretion, re-lease or sell any or all of the Pod at a public or private sale on such terms and notice as Franchisor's Affiliate shall deem reasonable (such sale may, at Franchisor's Affiliate's sole option, be conducted at Franchisee's premises), and recover from Franchisee damages, not as a penalty, but herein liquidated for all purposes and in an amount equal to the sum of (i) any accrued and all unpaid rent as of the later of (A) the date of default or (B) the date that Franchisor's Affiliate has obtained possession of the Pod or such other date as Franchisee has made an effective tender of possession of the Pod back to Franchisor's Affiliate ("Default Date"), plus interest at the rate of eighteen percent (18%) per annum; (ii) the present value of all future rentals reserved in the Lease and contracted to be paid over the unexpired term of the Lease discounted at a rate equal to the discount rate of the Federal Reserve Bank of Chicago as of the Default Date plus interest on said sum at the rate of eighteen percent (18%) per annum until paid; (iii) all commercially reasonable costs and expenses incurred by Franchisor's Affiliate in any repossession, recovery, storage, repair, sale, release or other disposition of the Pod including reasonable attorneys' fees and costs incurred in connection with or otherwise resulting from the Franchisee's default; (iv) 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 Default; and (v) any indemnity, if then determinable, plus interest at eighteen percent (18%) per annum, LESS the amount received by Franchisor's Affiliate upon such public or private sale or re-lease of such items of Pod, if any;
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
According to Aira Fitness's 2025 Franchise Disclosure Document, if a franchisee defaults on their lease agreement, Aira Fitness's affiliate has the right to re-lease or sell the Pod (the fitness equipment building) at a public or private sale. The amount received from this sale or re-lease is then subtracted from the total damages the franchisee owes.
The damages the franchisee owes include accrued and unpaid rent as of the default date, plus interest at 18% per annum. It also includes the present value of all future rentals discounted at the Federal Reserve Bank of Chicago's discount rate, plus interest at 18% per annum until paid. Additionally, the franchisee is responsible for all commercially reasonable costs and expenses incurred by Aira Fitness's affiliate in repossessing, recovering, storing, repairing, selling, or re-leasing the Pod, including attorney's fees. The damages also include the present value of the Pod's residual value, discounted at the Federal Reserve Bank of Chicago's discount rate as of the default date, and any indemnity, if determinable, plus interest at 18% per annum.
This clause protects Aira Fitness and its affiliates by ensuring they can recover losses incurred due to a franchisee's default. However, it also benefits the franchisee by reducing the amount owed by the proceeds from the sale or re-lease of the Pod. Prospective franchisees should carefully consider these financial implications and understand the conditions under which such defaults and terminations may occur.