What franchisee obligations to All Team survive the expiration or termination of the Franchise Agreement?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
The expiration or termination of this Agreement shall not relieve FRANCHISEE of any of FRANCHISEE's obligations to ATFC existing at the time of such expiration or termination, or terminate FRANCHISEE's obligations that, by their nature, survive the expiration or termination of this Agreement, including but not limited to the provisions regarding trade secrets, non-competition, non-solicitation and indemnification. Furthermore, the expiration or termination of this Agreement shall be without prejudice to ATFC's rights against FRANCHISEE; and in the event of a termination which is the result of FRANCHISEE's material breach or default under this Agreement, ATFC shall, in addition to its rights set forth above, also be entitled to all rights and remedies available at law or in equity.
Source: Item 22 — CONTRACTS (FDD pages 33–34)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, several franchisee obligations survive the expiration or termination of the Franchise Agreement. These include obligations related to trade secrets, non-competition, non-solicitation, and indemnification. This means that even after the franchise agreement ends, the franchisee must continue to protect All Team's confidential information, refrain from competing with All Team, and not solicit All Team's employees or customers. Additionally, the franchisee remains responsible for any liabilities or damages for which they have agreed to indemnify All Team.
Furthermore, the franchisee is obligated to pay any outstanding amounts due to All Team, its affiliates, and suppliers. The franchisee must also return all materials containing confidential information, including the Confidential Operating Manual, immediately upon termination or expiration. Additionally, the franchisee is required to cancel any assumed name registrations that contain All Team's marks and provide evidence of compliance to All Team within 5 days of termination or expiration.
All Team also reserves the right to conduct a post-termination audit to verify the accuracy of financial reporting, receivables, and compliance with client requirements. To ensure compliance, All Team may withhold up to $10,000 in customer payments for up to 12 months after termination as a reserve for unpaid receivables and customer chargebacks. The franchisee must also assign to All Team any interest in leases or subleases for the agency, and if All Team does not exercise this option, the franchisee must modify the premises to distinguish it from other All Team agencies.
These surviving obligations are typical in franchising to protect the franchisor's brand, trade secrets, and customer relationships. Prospective franchisees should carefully consider these obligations and their potential impact on their future business activities after the franchise agreement ends. It is important to understand the scope and duration of these obligations to avoid any potential legal issues.