Does this section of the All Team FDD obligate ATFC to accept late payments?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
Neither ATFC nor any of its affiliates are required to accept payments after same are due or extend credit or otherwise finance FRANCHISEE's operation of the franchise.
- R.
Limitation on Liens.
FRANCHISEE shall not grant a security interest, pledge, or place a lien upon FRANCHISEE's Interest in this Agreement or in the Agency or in the assets used in the business, except that FRANCHISEE shall be permitted to grant a security interest in such furniture, fixtures, and equipment to secure FRANCHISEE's obligation to the seller of or lender for such furniture, fixtures, and equipment to secure any indebtedness relating to the business and FRANCHISEE shall be permitted to assign its accounts receivable in connection with any third party financing of employee payroll subject to prior written approval of ATFC.
Source: Item 22 — CONTRACTS (FDD pages 33–34)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, All Team is not obligated to accept late payments from franchisees. The FDD explicitly states that neither All Team nor its affiliates are required to accept payments after they are due or to extend credit to finance the franchisee's operations. This means that All Team has the right to demand timely payments and is not compelled to provide any leniency or financial assistance to franchisees who are unable to meet their payment obligations.
This provision protects All Team's financial interests by ensuring that franchisees adhere to the agreed-upon payment schedules. It also allows All Team to maintain consistent cash flow and avoid potential losses associated with late or non-payments. Franchisees should be aware of this policy and ensure they have sufficient financial resources to meet their obligations to All Team on time.
Furthermore, the FDD also specifies that if any amounts due are not paid when due, All Team has the right to charge interest on late payments. This interest rate is the lesser of one and one-half percent (1½%) per month or the maximum legal rate in the jurisdiction where the agency is located. This interest charge serves as an additional incentive for franchisees to make timely payments and compensates All Team for the inconvenience and potential financial losses caused by late payments.