In the All Team Funding Agreement, what is the deadline for a customer to file for bankruptcy before an account is considered delinquent?
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.
Source: Item 23 — RECEIPT (FDD pages 34–161)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, a customer's bankruptcy filing can trigger an account being classified as delinquent. Specifically, if a customer is bankrupt or insolvent, or voluntarily seeks protection under federal bankruptcy laws, or has involuntary relief sought against them, or files an assignment for the benefit of creditors before being 90 days past their invoice date, the account is considered delinquent.
This means that even if an invoice is not yet 90 days old, an All Team franchisee faces the risk of the account immediately becoming delinquent if the customer declares bankruptcy or takes similar actions. 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.
This policy accelerates the timeline for delinquency based on financial solvency events, which is a stricter standard than solely relying on the age of the unpaid invoice. All Team franchisees should be aware of this provision and its potential impact on their accounts receivable and overall financial stability. They should also consider implementing credit checks and monitoring customer financial health to mitigate the risk of unexpected delinquent accounts due to bankruptcy filings.