Can an All Team franchisee obligate ATFC for any liabilities or expenses?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
USER shall not have the power and shall not represent or imply that it has the power, to obligate ATFC for any liabilities or expenses, except as otherwise expressly agreed to in writing by ATFC.
Neither USER nor any individual whose compensation for services is paid by USER in any way, directly or indirectly, expressly or by implication, shall be construed to be an employee of ATFC for any purpose, including, without limitation any tax or withholding requirements levied or fixed by any governmental law, rule or regulation is solely responsible for the day-to-day operations of the Business.
- D. Indemnification. Under no circumstances shall ATFC be liable for any act, omission, debt, or other obligation of USER.
USER will indemnify, defend and save harmless ATFC and its employees, agents, officers, directors, parents, subsidiaries, affiliates, successors and assigns ("Indemnitees") from and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, costs and expenses (including without limitation legal fees and expenses) of any kind and nature whatsoever, including without limitation damages or injuries suffered by Indemnitees, which may be imposed on, incurred by or asserted against the Indemnitees in any way arising out of the acts or omissions of USER or its employees, agents, officers, directors, parents, subsidiaries, affiliates, successors and assigns ("Indemnitors") pursuant to or relating to this Agreement or the transactions or relationships contemplated hereby or a breach or default by USER under this Agreement regardless of whether the Indemnities were negligent or that said negligence was a contributing factor in the liability.
- E. Assignment. This Processing Agreement is personal to USER and shall not be assignable or transferable by USER, in whole or in part, either voluntarily or by operation of law, except with the prior written consent of ATFC, which consent shall not unreasonably be withheld.
For all purposes of this Processing Agreement, the transfer of the majority of the equity of USER to persons other than the present owners thereof, or of any substantial portion of the Business in one or more transactions, shall be deemed an assignment of this Processing Agreement requiring such consent.
Any assignment must be in conjunction with a corresponding assignment under the Franchise Agreement.
Source: Item 23 — RECEIPT (FDD pages 34–161)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, a franchisee, referred to as USER, does not have the authority to obligate All Team Franchise Corporation (ATFC) for any liabilities or expenses. The only exception to this rule is if ATFC provides explicit written consent. This means that franchisees must operate independently and cannot create financial obligations on behalf of All Team without prior written approval.
Furthermore, the agreement specifies that neither the franchisee nor anyone paid by the franchisee will be considered an employee of All Team. This distinction is important for tax and legal reasons, as the franchisee is responsible for all employment-related obligations. All Team is also not liable for any act, omission, debt, or other obligation of the franchisee. This reinforces the independent contractor relationship and protects All Team from potential liabilities arising from the franchisee's operations.
To further protect All Team, the franchisee is required to indemnify, defend, and hold harmless All Team and its related parties from any liabilities, losses, damages, penalties, claims, actions, costs, and expenses arising from the franchisee's acts or omissions. This indemnification clause places the financial burden on the franchisee for any legal or financial issues stemming from their operation of the business. This is a common practice in franchising to ensure the franchisor is shielded from liabilities caused by the franchisee's actions.
Finally, the agreement states that the processing agreement is personal to the franchisee and cannot be assigned or transferred without All Team's prior written consent. This provision ensures that All Team maintains control over who operates under its brand and prevents unauthorized transfers of the franchise. Any transfer of equity or a substantial portion of the business is considered an assignment requiring consent, which must align with the Franchise Agreement.