What is the condition of the accounts that the distributor sells, assigns, and transfers to Aunt Millies Bakeries?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
ed from the weekly settlement, whether or not DISTRIBUTOR signs said form. DISTRIBUTOR acknowledges and agrees that the charges on Schedule C" (Form IO13) are subject to change by AUNT MILLIE's at any time.
- §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.
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries's 2025 Franchise Disclosure Document, the distributor sells, assigns, and transfers all rights, titles, and interests in charge slips and existing/future accounts from product sales to chains or outlets within the sales area to Aunt Millie's. These accounts are transferred at face value, net of all discounts, and must be free and clear of all liens, security agreements, and encumbrances, except those in favor of Aunt Millie's.
This means that when a distributor sells products to retail chains or outlets, the distributor is essentially selling the right to collect payment for those sales to Aunt Millie's. Aunt Millie's then credits the distributor's account for the face value of these sales, minus any discounts. This arrangement provides the distributor with immediate payment for sales, while Aunt Millie's assumes the responsibility of collecting payment from the chains and outlets.
However, the distributor must ensure that these accounts are free of any other claims or debts, as Aunt Millie's will only accept accounts that are clear of such encumbrances. This requirement protects Aunt Millie's interest in the receivables and ensures that they have the primary right to collect payment. The agreement continues until the termination of the Distribution Agreement, the distributor provides written notice of termination, or Aunt Millie's gives notice that a specific account's credit has not been approved.