Under what circumstances can ATFC charge or offset funds due to an All Team franchisee?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
Claims**. USER agrees to notify ATFC immediately of all returns and allowances and of all disputes made by Customers and to adjust all Disputes at its own expense, issuing credit memoranda promptly. ATFC's practice is to allow a reasonable time for the settlement of Disputes between USER and USER's Customers without waiving ATFC's right at any time to adjust any Disputes on Accounts Receivable directly with the Customer and to charge back to USER at any time the full uncollected amount of the purchased Account Receivable involved. ATFC may at any time charge or offset against any funds due to USER which are held or received by ATFC the full uncollected amount of: (a) any Customer deduction or offset; (b) any Account Receivable which is not paid in full when due for any reason (real or alleged); (c) any purchased Account Receivable with respect to which USER breaches any of the warranties or representations set forth in this Agreement; (d) any anticipation deducted by a Customer on any purchased Account Receivable; and (e) payments received by ATFC on Accounts Receivable which ATFC is required at any time or for any reason to turnover or return (including, without limitation, payments made by ATFC in connection with preference claims asserted in a bankruptcy or other insolvency proceeding). Any such charge back shall not be deemed to constitute a reassignment of the purchased Account Receivable, and ATFC shall retain a security interest therein. In the event that ATFC is required to make any payment of the type described in clause (e) above after the termination of this Agreement, USER shall, on demand, reimburse ATFC the full amount of any such payment. Such reimbursement obligation shall survive the termination of this Agreement.
- VIII. Security Interest in USER.
Source: Item 23 — RECEIPT (FDD pages 34–161)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, ATFC (All Team Franchise Corporation) has several rights to charge or offset funds that would otherwise be due to an All Team franchisee (referred to as USER). These circumstances primarily relate to unpaid customer invoices, disputes, and other financial obligations. ATFC can deduct Continuing License Fees, Advertising Fees, Technology Fees, and Processing Fees, as well as any other amounts due under the Franchise Agreement or Processing Agreement, from the weekly Purchase Price it owes to the franchisee.
Specifically, ATFC may charge or offset funds against amounts due to the franchisee for: (a) any Customer deduction or offset; (b) any Account Receivable which is not paid in full when due for any reason; (c) any purchased Account Receivable where the franchisee breaches warranties or representations; (d) any anticipation deducted by a Customer on any purchased Account Receivable; and (e) payments received by ATFC on Accounts Receivable that ATFC is required to return, such as in bankruptcy preference claims. Additionally, if any Account Receivable or any other financial obligation of the franchisee to ATFC becomes past due for more than 90 days, ATFC may set off the past due amount from any amounts owed to the franchisee.
Furthermore, All Team franchisees are charged an Accounts Receivable Service Charge at a rate of 0.05% per day on unpaid amounts for each delinquent Customer Invoice, starting 30 days after the invoice date. Customer Invoices unpaid after 90 days from the invoice date will be charged back to the franchisee. These deductions and offsets provide ATFC with mechanisms to manage financial risks associated with the franchise operation and ensure timely payments of fees and obligations. The franchisee is responsible for all costs of collection for delinquent accounts.
These provisions in the Funding Agreement mean that All Team franchisees need to manage customer relationships and accounts receivable diligently to avoid these charges and offsets. Franchisees should also be aware of their obligations under the Franchise Agreement and Processing Agreement to prevent deductions from their Purchase Price. Understanding these financial responsibilities is crucial for maintaining a healthy financial relationship with ATFC and operating a successful All Team franchise.