For All Team, what is the effect of termination on transactions or events occurring prior to termination?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
ll furnish ATFC with evidence satisfactory to ATFC of compliance with this obligation within 5 days of the termination, expiration or Transfer. ATFC reserves the right to conduct a post termination audit to confirm the accuracy of financial reporting, receivables, and compliance with client requirements. In addition, ATFC will withhold up to $10,000 in customer payments pending the result of the audit, or for up to 12 months after termination, as a reserve for unpaid receivables and customer chargebacks.
Upon ATFC's request, FRANCHISEE shall assign to ATFC any interest that FRANCHISEE may have in any lease or sublease for the Agency. ATFC may exercise the option at or within thirty (30) days after either termination or expiration of this Agreement or within thirty (30) days of notice by FRANCHISEE's landlord of its intent to terminate the lease or sublease. In such event ATFC, in its sole discretion, shall have the right and is hereby empowered to take possession of the premises demised by the lease or sublease, expel FRANCHISEE therefrom, and, in such event, FRANCHISEE shall have no further right, title or interest in the lease or sublease. In the event that ATFC does not elect to exercise its option to acquire the lease or sublease for the premises, FRANCHISEE shall make such modifications or alterations to the premises of the Agency operated hereunder immediately upon termination or expiration as may be necessary to distinguish the appearance of such premises from that of other All Team agencies under the System and shall make such specific additional changes thereto as ATFC may reasonably request for that purpose. In the event FRANCHISEE fails or refuses to comply
Source: Item 22 — CONTRACTS (FDD pages 33–34)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, termination of the franchise agreement does not necessarily end all financial obligations between the franchisee and All Team. Specifically, All Team has the right to withhold up to $10,000 in customer payments for up to 12 months after termination. This withholding serves as a reserve for any unpaid receivables or customer chargebacks that may arise.
This provision means that even after the franchise agreement is terminated, All Team retains control over a portion of the franchisee's funds to cover potential financial liabilities. This could impact the franchisee's cash flow and financial planning post-termination. The franchisee needs to be aware that a significant portion of their earnings could be held for an extended period, creating a financial buffer for All Team against potential losses stemming from the franchisee's operations.
Furthermore, upon termination or expiration of the agreement, All Team has the option to request the franchisee to assign any interest in the agency's lease or sublease to them. All Team can exercise this option within 30 days of termination or expiration, or within 30 days of the landlord's notice to terminate the lease. If All Team exercises this option, they can take possession of the premises, and the franchisee will lose all rights to the lease. If All Team does not acquire the lease, the franchisee must modify the premises to differentiate it from other All Team agencies, as per All Team's specifications, at the franchisee's expense. Failure to do so allows All Team to enter the premises and make the changes at the franchisee's expense.
These clauses highlight the importance of understanding the full financial and operational implications of termination, as franchisees may face continued financial obligations and potential loss of their lease even after the franchise agreement ends. Prospective franchisees should carefully consider these factors and seek legal counsel to fully understand their rights and obligations upon termination.