What is the effect of a tax levy against the debtor under the All Team agreement?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
Debtor agrees that the occurrence of any of the following events shall constitute a Default hereunder: (i) subject to any applicable notice or cure periods, the failure of Debtor to pay at maturity, or at any accelerated maturity, any of the Liabilities to Secured Party; (ii) the breach or failure to perform by Debtor any obligation, covenant, promise or agreement contained in this Agreement, and Debtor's failure to cure such breach or failure within fifteen (15) days after written notice thereof from Secured Party, or the breach or failure to perform by Debtor of any obligation, covenant, promise or agreement contained in any other agreement or contract to which Debtor and Secured Party are parties, subject to any applicable cure or grace periods, including the Funding Agreement and the Guaranty Agreement; (iii) any tax levy, attachment, garnishment, levy of execution or other process issued against Debtor or the Collateral; (iv) any Lien or security interest filed or created against the Collateral which is not expressly permitted by Secured Party; (v) the insolvency of Debtor, any bankruptcy or insolvency proceedings, or any assignment for the benefit of creditors commenced by or against Debtor or any accommodation party, surety or guarantor of any of the Liabilities; (vi) the dissolution, merger, consolidation or reorganization of Debtor; or (vii) the assignment by Debtor of any equity in any of the Collateral without the prior written consent of Secured Party.
- (b) Remedies*.* Upon the occurrence of a Default and at any time thereafter (i) Secured Party may declare all Liabilities secured by this Agreement or any of them (notwithstanding any provisions of them) to be immediately due and payable, and the same thereupon will be due and payable without further notice to Debtor; (ii) Secured Party may exercise from time to time the rights and remedies described in the Uniform Commercial Code in effect for the State of Florida and any other rights and remedies available to it under any other applicable law, and (iii) Debtor, at its expense, shall assemble the Collateral and make it available to Secured Party at a convenient place acceptable to Secured Party.
Source: Item 22 — CONTRACTS (FDD pages 33–34)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, a tax levy against the debtor can trigger a default under the security agreement. Specifically, the occurrence of "any tax levy, attachment, garnishment, levy of execution or other process issued against Debtor or the Collateral" constitutes an event of default.
Upon such a default, All Team has several remedies available. It may declare all liabilities secured by the agreement to be immediately due and payable. Additionally, All Team can exercise the rights and remedies described in the Uniform Commercial Code in effect for the State of Florida, as well as any other rights and remedies available under applicable law. The debtor is also required, at their own expense, to assemble the collateral and make it available to All Team at a convenient place acceptable to All Team.
This clause in the All Team security agreement is significant for prospective franchisees as it highlights the importance of managing their tax obligations. Failure to do so, resulting in a tax levy, can lead to serious consequences, including the acceleration of debt and the potential loss of collateral. Franchisees should ensure they have a solid financial plan and adhere to all tax laws to avoid triggering a default under this agreement.