What happens to the franchisee's accrued obligations to All Team after the franchise agreement terminates?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
e acts contemplated in this Section XII.C. ATFC has the right to file an original counterpart or a copy of this Agreement with the telephone company, landlord or any court, agency or person as written evidence of the appointment by FRANCHISEE of ATFC or ATFC's nominee to be FRANCHISEE's attorney-in-fact. The expiration or termination of this Agreement shall not relieve FRANCHISEE of any of FRANCHISEE's obligations to ATFC existing at the time of such expiration or termination, or terminate FRANCHISEE's obligations that, by their nature, survive the expiration or termination of this Agreement, including but not limited to the provisions regarding trade secrets, non-competition, non-solicitation and indemnification. Furthermore, the expiration or termination of this Agreement shall be without prejudice to ATFC's rights against FRANCHISEE;
Source: Item 22 — CONTRACTS (FDD pages 33–34)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, the termination or expiration of the Franchise Agreement does not relieve the franchisee of obligations to All Team that existed at the time of termination. This includes obligations that naturally survive the termination, such as those related to trade secrets, non-competition, non-solicitation, and indemnification. Therefore, even after the agreement ends, the franchisee remains responsible for fulfilling these specific duties.
Furthermore, the termination of the agreement does not prejudice All Team's rights against the franchisee. If the termination results from the franchisee's material breach or default, All Team is entitled to all rights and remedies available at law or in equity, in addition to the rights already mentioned. This means All Team can pursue legal action to recover any losses or damages resulting from the franchisee's breach.
Additionally, All Team reserves the right to conduct a post-termination audit to verify the accuracy of financial reporting, receivables, and compliance with client requirements. To ensure funds are available to cover potential discrepancies found during the audit, All Team will withhold up to $10,000 in customer payments for up to 12 months after termination as a reserve for unpaid receivables and customer chargebacks. This protects All Team from financial losses that may arise after the franchise agreement has ended.