What collateral does the UCC Financing Statement cover for Aunt Millies Bakeries franchisees?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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 Aunt Millies Bakeries' 2025 Franchise Disclosure Document, the UCC Financing Statement covers various assets as collateral. These include any rights the borrower (franchisee) has under the Distributor's Agreement with Perfection Bakeries, Inc., d/b/a Aunt Millie's. Additionally, it covers all equipment, inventory, accounts, goods, property, contract rights, chattel paper, and general intangibles related to or arising from the franchisee's business, regardless of when they were acquired or where they are located.
The collateral also extends to any accessions, replacements, and additions to the aforementioned items. Furthermore, all cash and non-cash proceeds, including insurance proceeds, derived from these assets are included as collateral. This comprehensive list ensures that Aunt Millie's Bakeries has a broad security interest in the franchisee's business assets to secure their obligations.
This security interest ensures that Aunt Millie's Bakeries has a claim on a wide range of the franchisee's assets in case of default. For a prospective franchisee, this means that virtually all aspects of their business, from equipment to accounts receivable, are at risk if they fail to meet their financial obligations. It is important for franchisees to understand the full scope of this collateral agreement and its implications for their business operations and financial stability.