Does All Team retain a security interest in the Accounts Receivable of its franchisees?

According to All Team's 2025 Franchise Disclosure Document, All Team does retain a security interest in the Accounts Receivable of its franchisees until all amounts due are paid. As part of the Funding Agreement, franchisees are required to sign a Security Agreement, the form of which is found in Exhibit A. Franchisees are also required to indemnify All Team in the event of any suit resulting from the Funding Agreement, which includes responsibility for paying reasonable attorneys' fees. Any disputes are to be settled by mediation, and the prevailing party is allowed to collect reasonable attorney's fees.

This security interest and the associated agreements are tied to the payroll funding that All Team may offer to franchisees. All Team purchases the franchisee's customer invoices each week, which become All Team's Accounts Receivables, less a Deferred Share, which is currently 20%. All Team advances the franchisee the 80% balance of the Accounts Receivables less various fees and deductions, including a Funding Fee, Processing Fee, out-of-pocket expenses, adjustments for Late or Delinquent Accounts, discounts made available to the Customer, and franchise fees.

This arrangement means that All Team has a direct financial stake in the franchisee's Accounts Receivable and can take legal action to protect its interests. The requirement for franchisees to indemnify All Team and cover legal fees adds another layer of financial responsibility for the franchisee. Prospective franchisees should carefully review the Funding Agreement and Security Agreement (Exhibit A and Exhibit C) to fully understand their obligations and potential liabilities related to the Accounts Receivable and the associated security interest.