How does Aunt Millies Bakeries collect note receivable payments from distributors?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
- §3.5 PURCHASE OF RECEIVABLES: AUNT MILLIE'S shall purchase from DISTRIBUTOR, and the DISTRIBUTOR HEREBY sells, assigns and transfers to AUNT MILLIE'S, all of DISTRIBUTOR'S right, title and interest in and to all of DISTRIBUTOR'S properly filled out and executed charge slips, all existing and future Accounts arising from the sale of Products to Chains or Outlets in the Sales Area and all proceeds thereof from the DISTRIBUTOR, at their face value, net of all discounts, free and clear of all liens, security agreements and encumbrances, other than in favor of, or permitted (in writing) by, AUNT MILLIE'S and its principal lender.
AUNT MILLIE'S shall credit DISTRIBUTOR'S account therefor.
DISTRIBUTOR shall promptly remit all such slips to AUNT MILLIE'S.
If any Chain elects to settle with DISTRIBUTOR on the basis of scan results, rather than charge slips, the credit to DISTRIBUTOR shall be adjusted for any difference between the charge slip and the actual sales reflected by the scan sale data.
The foregoing sale and purchase shall continue until termination of this Distribution Agreement, or until DISTRIBUTOR gives written notice of the termination of the foregoing sale to AUNT MILLIE'S, or, with respect to specific Accounts only, AUNT MILLIE'S gives notice that such Account's Chain's or Outlet's credit has not been approved by AUNT MILLIE'S.
For purposes of this Section 3.5, "Accounts" shall
mean accounts as defined in the Uniform Commercial Code as in effect in the state of organization of Distributor.
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries' 2025 Franchise Disclosure Document, Aunt Millie's Bakeries purchases the distributor's receivables. Specifically, Aunt Millie's Bakeries buys all rights, titles, and interests to the distributor's charge slips and accounts from product sales to chains or outlets within the sales area. This transfer occurs at face value, after deducting any discounts, and must be free of liens or encumbrances not approved by Aunt Millie's Bakeries. Aunt Millie's Bakeries then credits the distributor's account for these receivables.
The distributor is required to promptly submit all charge slips to Aunt Millie's Bakeries. If a chain settles payments based on scan results instead of charge slips, the credit to the distributor's account will be adjusted to reflect any differences between the charge slips and the actual sales data from the scan. This arrangement continues until the termination of the Distribution Agreement, or if the distributor provides written notice to end the sale of receivables to Aunt Millie's Bakeries. Aunt Millie's Bakeries can also terminate this arrangement for specific accounts if a chain or outlet's credit is not approved by Aunt Millie's Bakeries.
Furthermore, Aunt Millie's Bakeries has the right to establish and modify the profit margins on products sold by the distributor. The distributor is also subject to non-recurring charges, which are detailed on Form IO13 (Schedule "C") and deducted from the weekly settlement, regardless of whether the distributor signs the form. These charges on Schedule C are subject to change by Aunt Millie's Bakeries at any time. To secure any debts or liabilities, the distributor grants Aunt Millie's Bakeries a security interest in the distribution rights, assets, and receivables. The distributor must also execute a Security Agreement and financing statements to formalize this security interest, and any default under this agreement constitutes a default under the Distribution Agreement.