What constitutes a failure to comply with the provisions of the agreement that would trigger a default for Aunt Millies Bakeries?
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 borrower. These include failing to make payments when due, breaching any terms of the agreement with the Secured Party, or if the Distribution Agreement with PERFECTION BAKERIES, INC. is terminated.
Additionally, a default can occur if the borrower fails to maintain required insurance, does not submit timely financial statements and tax returns, or causes a reduction in the collateral's value that jeopardizes the ability to meet obligations. Any action that, in the Secured Party's judgment, negatively affects the collateral or the ability to fulfill obligations also constitutes a default.
Other default triggers include any unauthorized transfer of collateral, the filing of a lien against the collateral that remains unresolved for 30 days, or adverse financial events such as dissolution, insolvency, or bankruptcy proceedings involving the borrower or any guarantor. These provisions are designed to protect the Secured Party's interests and ensure the borrower meets their financial and operational obligations under the agreement.
For a prospective Aunt Millies Bakeries franchisee, understanding these default triggers is crucial. It highlights the importance of maintaining financial stability, adhering to all contractual obligations, and properly managing the assets used as collateral. Failure to do so could lead to the acceleration of debt and potential loss of the franchise.