What constitutes 'fraudulent activity' that would allow All Team to terminate the franchise agreement immediately?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
ntitled to written notice of default, but ATFC shall [if permitted by applicable law] be required to grant FRANCHISEE only ten (10) days to remedy such default. ATFC has the right to termination this Agreement upon providing FRANCHISEE written notice of said termination.
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- Without Opportunity to Cure. 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.
- B.
Source: Item 22 — CONTRACTS (FDD pages 33–34)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, 'fraudulent activity' that materially and adversely affects the operation, maintenance, reputation, or goodwill of the franchise can lead to immediate termination of the franchise agreement without notice, provided state law permits such action. This is one of several grounds for immediate termination, including conviction of a felony, abandonment of the franchise, bankruptcy or insolvency of the franchisee, termination of other agreements between the franchisee and All Team, repeated failure to comply with the agreement, or any act that allows termination without notice under state law.
Additionally, All Team can terminate the franchise agreement immediately if the franchisee engages in any illegal, fraudulent, unfair, or deceptive business practice that, in All Team's opinion, adversely affects the operation, maintenance, or goodwill of the franchise. This broad clause gives All Team significant discretion in determining what constitutes grounds for immediate termination.
For a prospective All Team franchisee, this means that engaging in any business practices deemed fraudulent or deceptive by All Team, even if not explicitly defined, could result in the immediate loss of their franchise. It is crucial for franchisees to understand and adhere to All Team's standards and expectations to avoid potential termination. Franchisees should seek clarification from All Team regarding what specific actions could be considered 'fraudulent activity' to ensure compliance and protect their investment.