For what reasons can All Team withhold customer payments after termination of the Funding Agreement?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
ign to USER any security interest or other interest which ATFC may have in USER's collateral. Notwithstanding any termination of this Funding Agreement, until such time as full payment is made by USER to ATFC of all sums due to ATFC under this Funding Agreement, USER shall continue to perform all of its obligations pursuant to the terms of this Funding Agreement with regard to such Accounts Receivable. No termination of this Funding Agreement, under any circumstances, shall release or discharge USER from its continuing obligations hereunder.
Source: Item 23 — RECEIPT (FDD pages 34–161)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, following the termination or expiration of the Funding Agreement for reasons other than the franchisee's termination right, All Team reserves specific rights regarding customer payments. All Team can withhold up to $10,000 in customer payments. This withholding serves as a reserve for potential unpaid receivables or customer chargebacks that may arise after the agreement ends.
This withholding is temporary, as All Team will only hold the funds pending the outcome of a post-termination audit. This audit is conducted to verify the accuracy of receivables and ensure compliance with client requirements. The funds can be held for up to 12 months after the termination date, providing All Team with a window to resolve any outstanding financial issues related to the franchisee's operation.
For a prospective All Team franchisee, this means that upon termination of the Funding Agreement, a portion of their expected payments could be delayed. It is important to maintain accurate records and comply with all client requirements to minimize the risk of discrepancies that could prolong the withholding period. Understanding the terms and potential reasons for customer chargebacks is also crucial to avoid any surprises during the post-termination audit. Franchisees should factor this potential delay into their financial planning when considering exiting the All Team franchise system.
It is also important to note that All Team's right to offset any damages or losses for which the franchisee is liable to indemnify or reimburse All Team is separate from the $10,000 hold. This means that All Team can deduct additional amounts beyond the $10,000 if the franchisee owes them money for other reasons.