What constitutes liquidated damages, and not a penalty, for All Team franchisees violating National/Regional Account requirements?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
s for the National/Regional Account must ultimately rest with the National/Regional Account. All National/Regional Accounts will be billed by ATFC, and customer payments for all National/Regional Accounts will be collected by ATFC exclusively and forwarded to FRANCHISEE as applicable.
In order for FRANCHISEE to be permitted to service a National/Regional Account, FRANCHISEE must: (i) maintain the insurance required by the National/Regional Account customer, and add the National/Regional Account customer and All Team Franchise Corporation as additional insureds, (ii) agree to be bound by and comply with all of the terms and conditions of the National/Regional Account and perform all of the obligations contained in the agreement between ATFC and the National/Regional account customer to the extent within their operational control; (iii) comply with any and all audits required by the National/Regional account customer; and (iv) and sign any document required by the National/Regional account customer. Uniformity and quality of services offered by all ATFC agencies to National/Regional Accounts is of utmost importance to ATFC and the entire System. If FRANCHISEE violates the National/Regional Account requirements described herein and in the Manual, FRANCHISEE agrees that ATFC will be damaged. These damages will be calculated at $1,000 for the first violation, $2,500 for the second violation and $5,000 for the third violation. After the third violation, FRANCHISEE may no longer be permitted to service National/Regional Accounts. ATFC has the right to collect these amounts in addition to exercising any and all other rights it may have for non-compliance under this Agreement. FRANCHISEE agrees that a precise calculation of the ful
Source: Item 22 — CONTRACTS (FDD pages 33–34)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, franchisees must adhere to specific requirements when servicing National/Regional Accounts. These requirements include maintaining necessary insurance, complying with the terms of agreements between All Team Franchise Corporation (ATFC) and the National/Regional Account customer, adhering to audit requirements, and signing required documents.
If an All Team franchisee violates these National/Regional Account requirements, ATFC will incur damages. The FDD specifies that calculating the precise extent of these damages is difficult, so the agreement stipulates fixed amounts for violations. The first violation results in $1,000 in damages, the second in $2,500, and the third in $5,000.
After a third violation, the franchisee may lose the privilege of servicing National/Regional Accounts altogether. All Team retains the right to collect these amounts in addition to any other rights it has under the Franchise Agreement for non-compliance. The agreement explicitly states that these damages are considered liquidated damages, not a penalty, indicating that both parties agree these amounts are a reasonable estimate of the harm caused by improper servicing of National/Regional Accounts.