What constitutes a default by an Aunt Millies Bakeries distributor regarding the value of the Collateral?

According to the 2025 Aunt Millies Bakeries FDD, a distributor can be considered in default if there is any reduction in the value of the collateral, due to the fault of the distributor, which imperils satisfaction of the distributor's obligations. This means that if the distributor's actions or negligence lead to a decrease in the value of the assets used as collateral, and this decrease puts the distributor at risk of not fulfilling their financial responsibilities, it constitutes a default.

This provision protects Aunt Millies Bakeries by ensuring that the collateral maintains its value, safeguarding their investment and ability to recover funds if the distributor fails to meet their obligations. For a prospective franchisee, this highlights the importance of properly maintaining and managing any assets used as collateral, as any decline in value due to their actions could trigger a default and potential loss of the franchise.

It is important for a potential Aunt Millies Bakeries franchisee to understand what specific assets are considered collateral and what actions could lead to a reduction in their value. Understanding these terms can help a franchisee avoid unintentional default and maintain a healthy business relationship with Aunt Millies Bakeries.