Is Aunt Millies Bakeries allowed to transfer assets pledged as collateral without consent?

According to the 2025 FDD, a borrower, presumably a franchisee of Aunt Millies Bakeries, is restricted from transferring assets pledged as collateral without obtaining prior written consent from the note holder. Specifically, the transfer of any assets pledged as collateral for a note requires the note holder's prior written consent. This condition is in place to protect the secured party's interest in the collateral and ensure that the borrower's obligations can be satisfied.

This restriction is outlined as a default condition, meaning that transferring assets without consent would constitute a breach of the agreement. Other actions that could trigger a default include failure to make payments, non-compliance with agreement provisions, expiration or termination of the Distribution Agreement, and a reduction in the value of the collateral. These default conditions are designed to safeguard the secured party's position and ensure the borrower adheres to the terms of the agreement.

This requirement protects Aunt Millies Bakeries by ensuring that franchisees do not diminish the value of the collateral securing their obligations without permission. For a prospective franchisee, this means they must seek and obtain written consent before transferring any assets pledged as collateral. Failure to do so could result in a default, potentially leading to remedies such as acceleration of the debt or foreclosure on the collateral.