What is the All Team franchisee's obligation regarding notifying ATFC of customer disputes and claims?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
- C. Customer Disputes and Claims.
USER agrees to notify ATFC immediately of all returns and allowances and of all disputes made by Customers and to adjust all Disputes at its own expense, issuing credit memoranda promptly.
ATFC's practice is to allow a reasonable time for the settlement of Disputes between USER and USER's Customers without waiving ATFC's right at any time to adjust any Disputes on Accounts Receivable directly with the Customer and to charge back to USER at any time the full uncollected amount of the purchased Account Receivable involved.
ATFC may at any time charge or offset against any funds due to USER which are held or received by ATFC the full uncollected amount of: (a) any Customer deduction or offset; (b) any Account Receivable which is not paid in full when due for any reason (real or alleged); (c) any purchased Account Receivable with respect to which USER breaches any of the warranties or representations set forth in this Agreement; (d) any anticipation deducted by a Customer on any purchased Account Receivable; and (e) payments received by ATFC on Accounts Receivable which ATFC is required at any time or for any reason to turnover or return (including, without limitation, payments made by ATFC in connection with preference claims asserted in a bankruptcy or other insolvency proceeding).
Source: Item 23 — RECEIPT (FDD pages 34–161)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, franchisees, referred to as USER in the document, have a clear obligation to notify ATFC immediately of all customer-related issues. This includes returns and allowances, as well as any disputes that may arise with customers. Furthermore, the franchisee is responsible for resolving these disputes at their own expense, which includes promptly issuing credit memoranda to rectify any issues. This requirement ensures that All Team is kept informed of any potential problems or dissatisfaction among customers, allowing them to maintain quality control and address concerns effectively.
This immediate notification requirement is crucial for several reasons. First, it allows All Team to stay informed about the franchisee's business operations and customer relations. Second, it enables All Team to intervene if necessary to protect its brand reputation and ensure customer satisfaction. Finally, it provides All Team with the opportunity to offer support and guidance to the franchisee in resolving disputes and managing customer relationships effectively.
All Team retains the right to directly adjust disputes with the customer regarding accounts receivable and charge the franchisee for the uncollected amount. All Team can also charge or offset against funds due to the franchisee for customer deductions, unpaid accounts receivable, breaches of warranties, anticipation deductions, and payments that All Team has to return, such as in the event of bankruptcy claims. This highlights the importance of franchisees diligently managing customer disputes and adhering to the terms of the agreement to avoid potential financial repercussions.
In practice, this means that an All Team franchisee must establish a system for promptly reporting any customer complaints or returns to ATFC. This could involve implementing a specific reporting procedure or utilizing a designated communication channel. By fulfilling this obligation, franchisees can maintain a positive relationship with All Team and minimize the risk of disputes escalating into more significant issues.