Is bankruptcy a curable or non-curable default for an All Team franchise?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding anything contained herein to the contrary, if state law permits, ATFC shall be permitted to terminate the franchise immediately and without notice when the basis or grounds for cancellation is: (a) conviction of a felony or any other criminal misconduct which, in ATFC's opinion materially and adversely affects the operation, maintenance, reputation, or goodwill of the franchise; (b) fraudulent activity which, in ATFC's opinion, materially and adversely affects the operation, maintenance, reputation, or goodwill of the franchise; (c) abandonment of the franchise; (d) bankruptcy or insolvency of the FRANCHISEE; (e) the termination of any other agreement between FRANCHISEE and ATFC or its affiliates; (f) repeated failure or refusal to comply with the lawful provisions of this Agreement, (i.e., three (3) or more times in any twelve (12) month period) whether or not such failures or refusals are corrected after notice; or (g) any other act or omission which permits termination without notice and/or an opportunity to cure under applicable state law.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 28–30)
What This Means (2025 FDD)
According to the 2025 All Team Franchise Disclosure Document, franchisee bankruptcy or insolvency constitutes grounds for immediate termination of the franchise agreement without an opportunity to cure the default. This means that if an All Team franchisee declares bankruptcy or becomes insolvent, All Team has the right to terminate the franchise agreement immediately. The franchisee will not be given a period to resolve the financial issues before the termination takes effect.
This policy is relatively common in franchising, as the franchisor needs to protect the brand and ensure financial stability across the franchise system. Bankruptcy or insolvency can significantly impact a franchisee's ability to meet brand standards and financial obligations, potentially harming the reputation and financial health of the entire All Team network.
Prospective All Team franchisees should be aware of this clause and carefully consider their financial stability and risk tolerance before investing in a franchise. It is crucial to have a solid financial plan and understand the potential consequences of financial distress leading to bankruptcy or insolvency. Franchisees should seek legal and financial advice to fully understand the implications of this provision in the franchise agreement.