Under the All Team agreement, what constitutes an event of default related to payments?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
Debtor agrees that the occurrence of any of the following events shall constitute a Default hereunder: (i) subject to any applicable notice or cure periods, the failure of Debtor to pay at maturity, or at any accelerated maturity, any of the Liabilities to Secured Party; (ii) the breach or failure to perform by Debtor any obligation, covenant, promise or agreement contained in this Agreement, and Debtor's failure to cure such breach or failure within fifteen (15) days after written notice thereof from Secured Party, or the breach or failure to perform by Debtor of any obligation, covenant, promise or agreement contained in any other agreement or contract to which Debtor and Secured Party are parties, subject to any applicable cure or grace periods, including the Funding Agreement and the Guaranty Agreement
Source: Item 22 — CONTRACTS (FDD pages 33–34)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, a payment-related event of default occurs if the franchisee (referred to as 'Debtor' in this context) fails to pay any liabilities to the secured party (All Team) at maturity or accelerated maturity, subject to any applicable notice or cure periods. This means that if an All Team franchisee does not make required payments on time, it can trigger a default under the agreement.
However, the franchisee may have an opportunity to correct the payment issue. The agreement states that the franchisee has a cure period after receiving written notice from All Team. If the franchisee rectifies the payment failure within fifteen days of the notice, it may avoid a default. This cure period provides a window for franchisees to address payment oversights or temporary financial difficulties.
It is important to note that All Team's acceptance of late payments does not waive their right to enforce the agreement fully. Even if All Team accepts payments after a breach, they can still exercise their rights under the agreement due to the franchisee's failure to pay on time. This clause protects All Team's ability to enforce the payment terms strictly, regardless of past leniency. Prospective franchisees should be aware of these payment obligations and ensure they have sufficient financial resources to meet them to avoid potential default and associated penalties.