What happens to the amount of a Delinquent Account for All Team franchisees?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
The balance of any Accounts Receivable remaining unpaid in whole or in part for more than 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 90 day period, or as to whom we have 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 our election, be paid by you to us upon demand. Any Delinquent Account that is subsequently collected by us shall be added to the next payment of your Purchase Price (less any other amounts due to us, including without limitation any interest, deductions or offsets permitted hereunder).
Source: Item 10 — FINANCING (FDD pages 17–18)
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 full or partially, for more than 90 days from the Customer Invoice date. This also applies to balances owed by 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 belief that a customer is about to become subject to any of these conditions, the account is also considered delinquent.
For All Team franchisees, the full amount of each Delinquent Account will be deducted from the Purchase Price that All Team pays to the franchisee for the customer invoices. Alternatively, All Team can demand that the franchisee pay the full amount of the Delinquent Account directly to them. However, if All Team subsequently collects any amount from a Delinquent Account, that amount (less any other amounts the franchisee owes to All Team, including interest, deductions, or offsets) will be added to the franchisee's next Purchase Price payment.
This policy creates a financial risk for All Team franchisees, as they are ultimately responsible for customer invoices being paid. Franchisees need to carefully manage their customer relationships and credit terms to minimize the risk of accounts becoming delinquent. The potential deduction from the Purchase Price or direct payment demand could significantly impact a franchisee's cash flow and profitability. Franchisees should also be aware of All Team's security interest in their Accounts Receivable until all amounts due are paid.