What assets are pledged as collateral under the bank agreement for Aunt Millies Bakeries?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
In consideration of the premises and agreements contained herein and other good and valuable consideration, the sufficiency and receipt of which is hereby acknowledged, the parties agree as follows:
- 1. GRANT OF SECURITY INTEREST: To secure the full and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of each of the Obligations (as hereafter defined), the Borrower hereby grants, conveys, assigns and transfers to Secured Party a security interest in and to the following personal property:
- a) any and all rights that the Borrower may have under the Distributor's Agreement between PERFECTION BAKERIES, INC., d/b/a AUNT MILLIE'S and Borrower;
- b) all equipment, inventory, accounts, goods, property, contract rights, chattel paper and general intangibles related to or arising from Borrower's business, whether now or hereafter existing or acquired and wherever located;
- c) any and all accessions, replacements and additions to or of the foregoing; and
- d) all cash or non-cash proceeds (including insurance proceeds) of the foregoing, the items described in a), b), c), and d) above being hereinafter collectively referred to as the "collateral".
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to the 2025 FDD, a Borrower grants a security interest in certain personal property to secure the obligations under the financing security agreement with Aunt Millies Bakeries. This collateral includes any rights the Borrower has under the Distributor's Agreement with Perfection Bakeries, Inc., d/b/a Aunt Millie's. It also encompasses all equipment, inventory, accounts, goods, property, contract rights, chattel paper, and general intangibles related to the Borrower's business, regardless of when or where they were acquired.
Furthermore, the collateral extends to any accessions, replacements, and additions to the aforementioned items. It also includes all cash and non-cash proceeds, such as insurance proceeds, derived from these assets. These items are collectively referred to as the "collateral" in the agreement.
This security interest ensures that Aunt Millies Bakeries has a claim on these assets if the Borrower fails to meet their financial obligations, such as payments on the promissory note or compliance with the terms of the Financing Security Agreement. This is a typical arrangement in franchise agreements to protect the franchisor's financial interests.