What is the definition of 'Accounts Receivable' in the context of the All Team Funding Agreement?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
USER's sale and assignment of Customer Invoices to ATFC grants ATFC all of USER's rights, securities, guaranties and liens with respect to each Customer Invoice and all of USER's defenses and rights of offset with respect to any payments received by ATFC.
These Customer Invoices, as a result of the sale to ATFC, become the accounts receivable of ATFC ("Accounts Receivable") and therefore ATFC shall not be obligated to, and shall not be liable for, exercising or refusing to exercise any rights granted to ATFC hereby.
USER shall execute and deliver to ATFC assignments of the Customer Invoices, which will include, without limitation, copies of all original invoices, copies of the bills of lading, proofs of delivery, contracts or purchase orders, and/or purchase order numbers which correspond with such Customer Invoices, and time tickets or other proofs of service as may be required by ATFC.
USER shall send the foregoing documentation to ATFC no later than noon Wednesday following the previous week.
Source: Item 23 — RECEIPT (FDD pages 34–161)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, the Accounts Receivable are defined within the context of the Funding Agreement between All Team Franchise Corporation (ATFC) and the franchisee (USER). Specifically, once the franchisee sells and assigns their customer invoices to ATFC, these invoices become the accounts receivable of ATFC. This transfer grants ATFC all of the franchisee's rights, securities, guarantees, and liens associated with each customer invoice, including any defenses and rights of offset related to payments received by ATFC.
This means that All Team, as the owner of the purchased accounts receivable, has the right to take various actions to enforce collection. These actions include initiating lawsuits, modifying payment terms, settling or compromising amounts owed, and issuing credits, all in either the franchisee's or All Team's name. Any payments or credits applied to a customer's account will first be directed towards the accounts receivable owed by that customer, regardless of any specific instructions from the customer or the invoice dates.
For a prospective All Team franchisee, this arrangement has several implications. The franchisee is required to transfer all rights to customer invoices to All Team, which then manages the collection process. The franchisee must provide All Team with necessary documentation, such as original invoices, bills of lading, and proofs of service, by noon on the Wednesday following the previous week. Furthermore, the franchisee is generally restricted from directly receiving customer payments, as these payments are to be made directly to All Team. Failure to comply with these requirements can lead to termination of the Funding Agreement and potential legal action.