Does the Aunt Millies Bakeries agreement allow for postponement of the attachment of any security interest?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
- §3.7 SECURITY INTEREST: To secure the payment of any indebtedness or liability of DISTRIBUTOR to AUNT MILLIE'S, now or hereafter arising, pursuant to this Agreement or otherwise, DISTRIBUTOR hereby grants and conveys to AUNT MILLIE'S a continuing and general security interest in the Distribution Rights, all other assets used in connection with the exercise and operation of the Distribution Rights, all rights hereunder and all Products and receivables of the DISTRIBUTOR, and grants to AUNT MILLIE'S the rights of a secured party. DISTRIBUTOR agrees to execute the AUNT MILLIE'S Security Agreement and financing statement(s) to evidence such security interest. Any default under the AUNT MILLIE'S Security Agreement by DISTRIBUTOR shall be a default under this Agreement.
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
Based on the 2025 Aunt Millies Bakeries FDD, the agreement does not explicitly state any allowance for the postponement of the attachment of a security interest. However, the FDD does outline the establishment of a security interest. Specifically, to secure any debts or liabilities a distributor may have to Aunt Millies Bakeries, the distributor grants Aunt Millies Bakeries a continuing security interest in the distribution rights, all assets used in connection with those rights, all rights under the agreement, and all products and receivables of the distributor.
The distributor is required to execute a security agreement and financing statements to formalize this security interest. Any failure to comply with the Aunt Millies Bakeries Security Agreement constitutes a default under the overall distribution agreement. This security interest ensures that Aunt Millies Bakeries has a legal claim on the distributor's assets to cover any outstanding financial obligations.
While the FDD details the creation and implications of the security interest, it remains silent on the possibility of postponing its attachment. A prospective franchisee should seek clarification from Aunt Millies Bakeries regarding whether there are any circumstances under which the attachment of the security interest could be delayed or if it is always effective immediately upon signing the agreement.