What does All Team consider the Dispute Resolution Fee to be: a penalty or liquidated damages?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
full force and effect subsequent to and notwithstanding the Transfer, or the termination or expiration of the term of this Agreement. The arbitration will be conducted on an individual, not a class-wide basis. None of the parties to the arbitration will be entitled to consolidation of the arbitration proceedings with the proceedings of any third party, nor will the arbitrator or any court be empowered to order a consolidation of proceedings with any third party.
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- Dispute Resolution Fee. In the event that the USER or its guarantors have not complied with the provisions in this Section on Dispute Resolution, USER shall reimburse ATFC for all of its expenses incurred in curing the USER's breach (including, without limitation, ATFC's attorneys' fees and costs related to dismissing and responding to any improperly filed claim) and pay the ATFC a Dispute Resolution Fee of $50,000 ("Dispute Resolution Fee"). USER acknowledges and agrees that the ATFC will be damaged by such breach. USER agrees that a
Source: Item 23 — RECEIPT (FDD pages 34–161)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, the Dispute Resolution Fee is considered liquidated damages, not a penalty. Specifically, if a franchisee (USER) or their guarantors fail to comply with the dispute resolution provisions outlined in the agreement, they are required to reimburse All Team (ATFC) for all expenses incurred in addressing the breach. This includes attorney's fees and costs related to dismissing any improperly filed claim. Additionally, the franchisee must pay All Team a Dispute Resolution Fee of $50,000.
The FDD states that All Team and the franchisee acknowledge that All Team will be damaged by a breach of the dispute resolution provisions. It is also acknowledged that precisely calculating the full extent of these damages would be difficult. Therefore, both parties agree that the $50,000 Dispute Resolution Fee is a reasonable estimate of damages and serves to provide certainty in the matter.
This means that if a franchisee violates the dispute resolution terms, they will be obligated to pay the $50,000 fee, which All Team considers a pre-agreed upon compensation for damages rather than a punishment. All Team retains the right to collect this fee in addition to any other rights they may have for non-compliance under the agreement. Prospective franchisees should carefully review the dispute resolution provisions to understand what actions could trigger this fee and ensure they comply with these terms to avoid incurring the $50,000 charge.