Who bears the risks and costs of operating the distribution business for Aunt Millies Bakeries?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
As an independent contractor, DISTRIBUTOR has the right to operate the business as DISTRIBUTOR chooses, and shall bear all risks and costs of operating such business. DISTRIBUTOR has no authority to retain any person on behalf of AUNT MILLIE'S. It is expressly understood that DISTRIBUTOR has no claim, or right under any circumstances, to any benefits or other compensation currently paid by AUNT MILLIE'S to employees, or hereafter declared by AUNT MILLIE'S for the benefit of employees. No fiduciary relationship exists between the parties.
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries' 2025 Franchise Disclosure Document, the distributor bears all risks and costs of operating their distribution business. As stated in Section 2.3, the relationship between Aunt Millies Bakeries and the distributor is that of independent contractors.
As an independent contractor, the distributor has the right to operate the business as they choose. However, this independence comes with the responsibility of bearing all the risks and costs associated with running the distribution business. The distributor is also responsible for managing and compensating any individuals they engage to assist with their responsibilities, while also adhering to all government laws and regulations related to employment.
This arrangement means that the distributor, not Aunt Millies Bakeries, is responsible for expenses such as vehicle maintenance (except for advertising decals which are covered by Aunt Millies Bakeries if the distributor agrees to display them), employee wages, insurance, and any other costs incurred while operating the distribution business. The distributor also takes on the risk of potential losses or liabilities that may arise during the course of business operations.