What is ATFC's practice regarding settling disputes between All Team franchisees and their customers?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
- C. Customer Disputes and Claims.
USER agrees to notify ATFC immediately of all returns and allowances and of all disputes made by Customers and to adjust all Disputes at its own expense, issuing credit memoranda promptly.
ATFC's practice is to allow a reasonable time for the settlement of Disputes between USER and USER's Customers without waiving ATFC's right at any time to adjust any Disputes on Accounts Receivable directly with the Customer and to charge back to USER at any time the full uncollected amount of the purchased Account Receivable involved.
ATFC may at any time charge or offset against any funds due to USER which are held or received by ATFC the full uncollected amount of: (a) any Customer deduction or offset; (b) any Account Receivable which is not paid in full when due for any reason (real or alleged); (c) any purchased Account Receivable with respect to which USER breaches any of the warranties or representations set forth in this Agreement; (d) any anticipation deducted by a Customer on any purchased Account Receivable; and (e) payments received by ATFC on Accounts Receivable which ATFC is required at any time or for any reason to turnover or return (including, without limitation, payments made by ATFC in connection with preference claims asserted in a bankruptcy or other insolvency proceeding).
Source: Item 23 — RECEIPT (FDD pages 34–161)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, the franchisee (referred to as USER) is responsible for immediately notifying ATFC of any customer disputes or claims and must resolve these disputes at their own expense, promptly issuing credit memoranda. ATFC will allow a reasonable time for the franchisee and their customers to settle disputes. However, ATFC retains the right to directly adjust accounts receivable with the customer and charge back the full uncollected amount to the franchisee at any time.
ATFC may offset against any funds due to the franchisee the full uncollected amount of customer deductions, offsets, or any account receivable not paid in full. This also applies to situations where the franchisee breaches warranties or representations, or if ATFC has to return payments due to bankruptcy or insolvency proceedings.
In practical terms, this means that All Team franchisees bear the primary responsibility and financial risk for resolving customer disputes. While ATFC may allow some time for resolution between the franchisee and customer, they ultimately have the authority to step in, settle the dispute directly with the customer, and deduct the disputed amount from payments owed to the franchisee. This arrangement places a significant burden on the franchisee to manage customer relations effectively and minimize disputes to avoid financial repercussions.