What constitutes a default by an Aunt Millies Bakeries distributor regarding compliance with agreements?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
The following shall constitute a default by the Borrower:
- a) Borrower's failure to pay to Secured Party when due any obligation secured by this Agreement;
- b) any termination of the Distributor's Agreement executed between Borrower and PERFECTION BAKERIES, INC., d/b/a AUNT MILLIE'S of even date herewith;
- c) Borrower's failure to comply with or perform any provisions or covenants of this Agreement or any other agreement between Borrower and Secured Party;
- d) Borrower's failure to maintain the insurance required in Article 3 above;
- e) Borrower's failure to submit current financial statements and tax returns as required in Article 3 above;
- f) any reduction in the value of the collateral, due to the fault of the Borrower, which imperils satisfaction of Borrower's obligations hereunder;
- g) Any action or failure to act of Borrower which, in the reasonable judgment of the Secured Party, adversely affects the collateral or the ability to satisfy any of Borrower's obligations hereunder
- h) the making of any seizure, sale, assignment, lease, pledge or other transfer of any collateral, except as otherwise permitted under this Agreement;
- i) a notice of lien, levy, attachment or assessment is filed or recorded with respect to any collateral, and the claim is not fully discharged and satisfied within 30 days of such filing or recordation;
- j) with respect to Borrower or a guarantor of Borrower's obligations hereunder: dissolution, insolvency, inability to pay debts as they mature, appointment of a receiver for any part of its/his/her property, assignment for the benefit of creditors, the commencement of any proceeding under any bankruptcy or insolvency laws, or other material adverse change in financial condition or means or ability to pay.
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries' 2025 Franchise Disclosure Document, several actions can trigger a default by the distributor. These include failing to make payments when due to the secured party, which is likely Aunt Millie's Bakeries, or if the Distributor Agreement between the borrower and Perfection Bakeries, Inc., d/b/a Aunt Millie's is terminated.
Other defaults include failing to comply with any provisions or covenants within the agreement or any other agreement between the borrower and the secured party, not maintaining required insurance, or neglecting to submit current financial statements and tax returns as required. Additionally, any reduction in the collateral's value due to the distributor's fault that jeopardizes the ability to satisfy obligations, or any action that adversely affects the collateral or the ability to meet obligations, can also lead to a default.
Furthermore, a distributor defaults by making unauthorized transfers of collateral, if a lien, levy, attachment, or assessment is filed against any collateral and remains undischarged after 30 days, or if the distributor or a guarantor experiences dissolution, insolvency, or bankruptcy proceedings. These stipulations ensure Aunt Millies Bakeries has grounds to act if the distributor fails to meet financial or operational obligations, protecting their investment and brand reputation.