Is the Dispute Resolution Fee considered a penalty by the All Team franchise?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
vision will continue in 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 Dispu
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 not considered a penalty. The document states that if a franchisee (USER) or its guarantors do not comply with the dispute resolution provisions, the franchisee will have to reimburse All Team (ATFC) for all expenses incurred in curing the breach, including attorney's fees and costs related to dismissing any improperly filed claim. In addition to covering All Team's expenses, the franchisee will also have to pay All Team a Dispute Resolution Fee of $50,000.
The FDD clarifies that All Team and the franchisee agree that calculating the full extent of damages from a breach of the dispute resolution provisions is difficult, and they desire certainty in the matter. Therefore, the $50,000 Dispute Resolution Fee is considered a reasonable estimate of damages (liquidated damages) and not a penalty.
This means that if a franchisee violates the dispute resolution terms outlined in the franchise agreement, they will be responsible for covering All Team's costs to remedy the breach, as well as paying the $50,000 Dispute Resolution Fee. Prospective franchisees should understand the dispute resolution process and ensure compliance to avoid incurring this fee.