Is an All Team franchisee required to sign a Security Agreement?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
Until we are paid all amounts due, we will retain a security interest in your Accounts Receivable. You are required to sign a Security Agreement in the form found in Exhibit A of the Funding Agreement. You are required to indemnify us in the event of any suit resulting from the Funding Agreement; you would be responsible for paying reasonable attorneys' fees. If there is a dispute, it is to be settled by mediation and the prevailing party is allowed to collect reasonable attorney's fees.
Source: Item 10 — FINANCING (FDD pages 17–18)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, franchisees are required to sign a Security Agreement as part of the payroll funding process. Specifically, All Team retains a security interest in the franchisee's Accounts Receivable until all amounts due are paid. The Security Agreement itself is included as Exhibit A to the Funding Agreement.
This requirement is tied to All Team's offering of temporary payroll funding to franchisees, based on the availability from their lending institutions and the franchisee's creditworthiness. If a franchisee is approved for payroll funding, they must sign a Funding Agreement, which is included as Exhibit C to the FDD. This agreement has an initial term of 3 years and automatically renews for additional 1-year terms.
The Security Agreement protects All Team's financial interest in the accounts receivable. It ensures that All Team has a legal claim to those assets in case the franchisee defaults on their obligations. This is a fairly standard practice when a franchisor provides financing or extends credit to a franchisee, as it mitigates the franchisor's risk. Prospective franchisees should carefully review Exhibit A to understand the full scope of the security interest and their obligations under the agreement.