Who is responsible for reimbursing ATFC's expenses if the All Team franchisee breaches the dispute resolution provisions?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
will be conducted on an individual, not a class-wide basis. None of the parties to the arbitration will be entitled to consolidation of the arbitration proceedings with the proceedings of any third party, nor will the arbitrator or any court be empowered to order a consolidation of proceedings with any third party.
D. Dispute Resolution Fee. In the event that the FRANCHISEE or its guarantors have not complied with the provisions in this Section on Dispute Resolution, FRANCHISEE shall reimburse ATFC for all of its expenses incurred in curing the FRANCHISEE's breach (including, without limitation, ATFC's attorneys' fees and costs related to dismissing and responding to any improperly filed claim) and pay the ATFC a Dispute Resolution Fee of $50,000 ("Dispute Resolution Fee"). FRANCHISEE acknowledges and agrees that the ATFC will be damaged by such breach. FRANCHISEE agrees that a precise calculation of the full extent of the damages that ATFC will incur from the breach of the Dispute Resolution provisions of this Agreement are difficult to determine and
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 fails to comply with the dispute resolution provisions outlined in the franchise agreement, the franchisee is responsible for reimbursing All Team Franchise Corporation (ATFC) for all expenses incurred in addressing the breach. This includes, but is not limited to, All Team's attorney's fees and costs associated with dismissing or responding to any improperly filed claims.
In addition to covering All Team's expenses, the franchisee must also pay All Team a Dispute Resolution Fee of $50,000. The FDD states that All Team will be damaged by such a breach, and because a precise calculation of the full extent of the damages is difficult to determine, the parties agree that the Dispute Resolution Fee is reasonable and constitutes liquidated damages rather than a penalty.
All Team retains the right to collect these amounts, along with exercising any other rights it may have for non-compliance under the agreement. This means that a franchisee could face significant financial penalties for failing to adhere to the dispute resolution process specified in the franchise agreement.