Under what condition is the payment of the Initial Franchise/Development Fees for an Aira Fitness franchise deferred?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Payment of Initial Franchise/Development Fees will be deferred until Franchisor has met its initial obligations to franchisee, and franchisee has commenced doing business. This financial assurance requirement was imposed by the Office of the Illinois Attorney General due to Franchisor's financial condition.
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Sections 2.1 and 2.2 of the Multi-Unit Development Agreement on "Fees" are amended by the addition of the following:
Notwithstanding the language in Sections 2.2., payment of the development fee is deferred until the franchisor has fulfilled its pre-opening obligations to the franchisee and the franchisee is open for business.
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- In lieu of an impound of franchise fees, the Franchisor will not require or accept the payment of any initial franchise fees until the franchisee has (a) received all pre-opening and initial training obligations that it is entitled to under the franchise agreement or offering circular, and (b) is open for business. Because franchisor has material pre-opening obligations with respect to each franchised business Franchisee opens under the Multi- Unit Development Agreement, payment of the franchise fee will be released proportionally with respect to each franchise outlet opened and until franchisor has met all its pre-opening obligations under the Agreement and Franchisee is open for business with respect to each such location.
The Virginial State Corporate Commission's Division of Securities and Retail Franchising requires us to defer payment of the initial franchise fee and other initial payments owned by franchisees to the franchisor until the franchisor has completed its pre-opening obligations under the franchise agreement.
Source: Item 17 — **RENEWAL, TERMINATION,TRANSFER AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 48–54)
What This Means (2025 FDD)
According to the 2025 Aira Fitness Franchise Disclosure Document, the payment of Initial Franchise/Development Fees is deferred under specific conditions, primarily related to the franchisor's obligations and the franchisee's commencement of business.
For franchisees in Illinois, the payment of these fees is deferred until Aira Fitness has met its initial obligations to the franchisee, and the franchisee has started conducting business. This requirement was mandated by the Office of the Illinois Attorney General due to Aira Fitness's financial condition. This means that franchisees in Illinois will not be required to pay the initial fees until Aira Fitness has fulfilled its pre-opening responsibilities as outlined in the franchise agreement and the franchisee has opened their Aira Fitness location.
Similarly, for franchisees in Virginia, the Virginia State Corporate Commission's Division of Securities and Retail Franchising requires Aira Fitness to defer payment of the initial franchise fee and other initial payments until Aira Fitness has completed its pre-opening obligations under the franchise agreement.
Furthermore, regarding the Multi-Unit Development Agreement, payment of the development fee is deferred until Aira Fitness has fulfilled its pre-opening obligations to the franchisee and the franchisee is open for business. Also, Aira Fitness will not require or accept the payment of any initial franchise fees until the franchisee has received all pre-opening and initial training obligations and is open for business. The franchise fee will be released proportionally with respect to each franchise outlet opened and until Aira Fitness has met all its pre-opening obligations under the Agreement and Franchisee is open for business with respect to each such location.