Does Aunt Millies Bakeries have to approve the sale or transfer of Distribution Rights?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
- §7.1 CONDITIONS OF ASSIGNABILITY: The Distribution Rights are owned by the DISTRIBUTOR and may be sold or otherwise transferred in whole or in part by DISTRIBUTOR, provided that any such sale or transfer shall be subject to: (a) the prior written approval of AUNT MILLIE'S, which approval will not be unreasonably withheld; and (b) a right of first refusal on the part of AUNT MILLIE'S at the same terms and conditions offered to DISTRIBUTOR (the "Offer") by a bona fide purchaser or transferee (the "Offeror"). The right of approval and right of refusal referred to herein shall expire unless DISTRIBUTOR is notified by AUNT MILLIE'S that it does not approve the Offeror or that it wishes to exercise its right of first refusal by notice given within ten (10) business days after the last to occur of the following:
- i. receipt by AUNT MILLIE'S of written notice of intent to sell or transfer to a named Offeror on terms and conditions fully set forth in such notice; and
- ii. a personal interview of the Offeror's controlling shareholder by a designated AUNT MILLIE'S representative; and
- iii. receipt by AUNT MILLIE'S of the Offeror's and Offeror's controlling shareholder's current financial statements and such additional information as is relevant concerning the Offeror's and Offeror's controlling shareholder's financial condition, health, credit, driving record, and other matters reasonably appropriate to AUNT MILLIE'S' determination. If the contemplated sale or transfer is not a bona fide transfer for value, the price to be paid by AUNT MILLIE'S shall be the fair market value of the Distribution Rights at the time of receipt of such notice of intent. If AUNT MILLIE'S right of approval and right of first refusal expire as provided above DISTRIBUTOR may consummate the transfer to the Offeror on the terms of the Offer.
- §7.2 SALE OF STOCK: The transfer of a controlling interest in Distributor shall be deemed a transfer of the Distribution Rights and shall be subject to all of the terms and conditions of this Article 7.
- §7.3 PROCEEDS: Any sale shall be for the account of DISTRIBUTOR, and the proceeds of the sale, after deducting therefrom any monies owed by DISTRIBUTOR to AUNT MILLIE'S, a reasonable reserve against open accounts, all reasonable costs and expenses in connection with the sale (including without limitation the cost of removing any off code or damaged Products in DISTRIBUTOR'S Sales Area) and the satisfying of any outstanding debts, liens, security interests, legal fees and similar expenses, shall be turned over to DISTRIBUTOR.
- §7.4 TRANSFER DOCUMENTS: In the event of a sale or transfer by or for the account of DISTRIBUTOR as described in this Article 7, DISTRIBUTOR shall execute an appropriate bill of sale to the purchaser, and a general release terminating, canceling and surrendering DISTRIBUTOR'S rights under this Agreement and releasing any and all claims against AUNT MILLIE'S and its officers, directors, shareholders, employees, successors and assigns arising under or out of this Agreement, and AUNT
- MILLIE'S shall execute a new Distribution Agreement with the purchaser in the form of agreement then being used by AUNT MILLIE'S.
- §7.5 PAYMENT OF FEE: In the event of a sale or transfer by DISTRIBUTOR, or by AUNT MILLIE'S for the account of DISTRIBUTOR, of all or any portion of the Distribution Rights, DISTRIBUTOR shall pay a Transfer Fee to AUNT MILLIE'S in an amount equal to TWO PERCENT (2%) of the sales price, in full consideration for the administrative activities undertaken by AUNT MILLIE'S in connection therewith.
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries' 2025 Franchise Disclosure Document, the sale or transfer of Distribution Rights is subject to certain conditions. Specifically, Aunt Millies Bakeries requires prior written approval for any sale or transfer of these rights. However, this approval will not be unreasonably withheld. Additionally, Aunt Millies Bakeries retains the right of first refusal, allowing them to purchase or acquire the Distribution Rights under the same terms offered to the distributor by a third-party buyer.
This right of approval and first refusal will expire unless Aunt Millies Bakeries notifies the distributor within ten business days of receiving written notice of the intended sale or transfer, including the terms and conditions, and after a personal interview with the Offeror's controlling shareholder. The notification must state that Aunt Millies Bakeries does not approve of the Offeror or wishes to exercise its right of first refusal. Furthermore, the transfer of a controlling interest in the distributor is considered a transfer of the Distribution Rights and is subject to the same terms and conditions.
In the event of a sale, the proceeds will be distributed with priority given to Aunt Millies Bakeries. Any monies owed to Aunt Millies Bakeries, a reasonable reserve against open accounts, costs associated with the sale (including removing damaged products), and outstanding debts must be satisfied before the remaining proceeds are turned over to the distributor. The distributor is also responsible for executing a bill of sale to the purchaser and a general release, which terminates the distributor's rights under the agreement and releases any claims against Aunt Millies Bakeries. In the event of a sale or transfer by the distributor, a Transfer Fee equal to 2% of the sales price will be paid to Aunt Millies Bakeries.