If an All Team franchisee under-reports gross billings, what will they be required to reimburse?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
If it is found that FRANCHISEE under-reported Temporary Employment Gross Billings and/or Permanent Placement Gross Billings, FRANCHISEE will reimburse ATFC for the amount of the Fees charges that would have been billed had billings been reported accurately, plus interest on those amounts at the rate of the lesser of one and one-half percent (1½%) per month or the maximum legal rate in the jurisdiction where the Agency is located. In addition, in the event that an audit by ATFC results in a determination that any or all of the Fees paid to ATFC are deficient (underpaid) by more than one percent (1%), the FRANCHISEE shall promptly pay to ATFC any amounts shown to be due and all costs and expenses incurred by ATFC in conducting the subsequent audit to determine that the FRANCHISEE is reporting correctly (not the audit which disclosed the original deficiency), including salaries of the ATFC's representatives, travel costs, room and board and audit fees. Nothing contained herein shall constitute an agreement by ATFC to accept any payments after the same are due or commitment by ATFC to extend credit to or otherwise finance the FRANCHISEE's operation of the Agency. The obligations of this provision survive termination or expiration of the Agreement.
Source: Item 22 — CONTRACTS (FDD pages 33–34)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, if a franchisee is found to have under-reported their Temporary Employment Gross Billings or Permanent Placement Gross Billings, they will be required to reimburse All Team Franchise Corporation (ATFC). This reimbursement will cover the difference in fees that should have been charged based on accurate reporting, along with interest. The interest will be calculated at the lesser of 1.5% per month or the maximum legal rate applicable in the franchisee's jurisdiction.
In addition to the underpaid fees and interest, if an audit conducted by All Team reveals that the fees paid were deficient (underpaid) by more than 1%, the franchisee is responsible for paying the outstanding amounts immediately. Furthermore, the franchisee must cover all costs and expenses incurred by All Team in conducting a subsequent audit to verify correct reporting. These costs include the salaries of All Team's representatives, travel expenses, room and board, and audit fees.
This clause ensures that All Team franchisees accurately report their gross billings, as under-reporting can lead to significant financial repercussions. The costs associated with audits and interest on underpaid fees can add up quickly, creating a strong incentive for franchisees to maintain accurate records. This is a fairly standard practice in franchising, as franchisors rely on accurate reporting to calculate royalties and maintain the financial health of the franchise system.
The obligations for these reimbursements survive the termination or expiration of the Franchise Agreement, meaning that even after the franchise relationship ends, the franchisee may still be liable for any under-reported billings discovered later. Prospective franchisees should be aware of these potential costs and ensure they have systems in place to accurately track and report their gross billings to All Team.