For All Team franchisees, what constitutes a 'Delinquent Account' based on the number of days an Accounts Receivable remains unpaid?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
Delinquent Account*.* The balance of any Accounts Receivable remaining unpaid in whole or in part for more than ninety days (90) days from the Customer Invoice date and the balance of any Accounts Receivable owing by any Customer who is bankrupt or insolvent or who voluntarily seeks protection under the federal bankruptcy laws or against whom involuntary relief in bankruptcy is sought, or who has filed an assignment for the benefit of creditors prior to the expiration of such ninety days (90) day period, or as to whom ATFC has a reasonable basis for believing that such Customer is about to become subject to one of the foregoing conditions or events shall be deemed a "Delinquent Account." The full amount of each Delinquent Account shall be deducted from the Purchase Price or, at ATFC's election, be paid by USER to ATFC upon demand.
Payment received by ATFC in the form of a check shall be deemed to have been received by ATFC when the funds represented thereby have been collected.
Notwithstanding the payment to or deduction by ATFC of any Delinquent Account or any termination of this Funding Agreement, so long as any amounts owing to ATFC under this Funding Agreement remain unpaid, any payments on Delinquent Accounts shall continue to be collected by ATFC as collection agent for USER.
Source: Item 23 — RECEIPT (FDD pages 34–161)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, a 'Delinquent Account' is defined as any Accounts Receivable balance that remains unpaid, either in whole or in part, for more than ninety (90) days from the date of the Customer Invoice. This definition also includes Accounts Receivable from customers who are bankrupt, insolvent, seeking bankruptcy protection, or have made an assignment for the benefit of creditors before the 90-day period expires. Additionally, if All Team has a reasonable basis to believe a customer is about to become subject to any of these conditions, the account is also considered delinquent.
For an All Team franchisee, this means that if a customer's invoice is not paid within 90 days, the outstanding balance is classified as a 'Delinquent Account'. The full amount of each Delinquent Account will be deducted from the franchisee's Purchase Price or, at All Team's discretion, the franchisee must pay the amount to All Team upon demand. This has significant financial implications, as the franchisee may lose revenue for services rendered if customers do not pay promptly.
It's important to note that even after the Delinquent Account is paid to or deducted by All Team, any subsequent payments on that account will still be collected by All Team as the collection agent for the franchisee, as long as there are outstanding amounts owed to All Team under the Funding Agreement. This ensures that All Team continues to manage the collection process for these accounts. The franchisee is responsible for the costs associated with the collection of delinquent accounts.
Furthermore, All Team also charges the franchisee an Accounts Receivable Service Charge. This charge is calculated at a rate of 0.05% per day on the unpaid amounts for each delinquent Customer Invoice, beginning 30 days after the date of the Customer Invoice. Customer Invoices that are unpaid after 90 days of the date of the Customer Invoice will be charged back to the USER as set forth in Section VII.B below. This Accounts Receivable Service Charge will be assessed after the Customer Invoice amount has been delinquent for a period of 30 days.