How does the death of the borrower affect the Aunt Millies Bakeries agreement?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
This Note, and all other obligations of the Borrower to Note Holder, shall be and become immediately due and payable at the option of the Note Holder, without any demand or notice whatsoever, upon the occurrence of any of the following described events, each of which shall constitute a default:
- a) any failure to make any payment when due of the principal, interest or late charges;
- b) Borrower's failure to comply with or perform any provisions or covenants under the Financing Security Agreement executed simultaneously herewith or any other agreement between Borrower and Note Holder;
- c) the expiration, cancellation or termination of the Distribution Agreement executed between Borrower and PERFECTION BAKERIES, INC.;
- d) the death of the Borrower;
- e) any failure to submit to Note Holder, in form satisfactory to Note Holder, current personal financial information, as requested by Secured Party, current quarterly business financial statements within 30 days of the close of each calendar quarter and annual tax returns within 30 days of the date due for filing;
- f) any reduction in the value of the Collateral, due to the fault of the Borrower, which adversely affects the likelihood of satisfaction of Borrower's obligations hereunder;
- g) any action or failure to act of Borrower which, in the reasonable judgment of Note Holder, adversely affects the Collateral or Borrower's ability to repay the obligations of this Note;
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries's 2025 Franchise Disclosure Document, the death of the borrower constitutes a default under the terms of the Promissory Note. Specifically, upon the borrower's death, all obligations of the borrower to the note holder become immediately due and payable at the option of the note holder, without any demand or notice. This means that Aunt Millie's Bakeries has the right to demand immediate payment of the outstanding principal, interest, and any late charges.
This provision protects Aunt Millie's Bakeries by allowing them to promptly address the debt in the event of the borrower's death. It ensures that the outstanding loan is addressed without delay, as the death of the borrower could complicate the recovery of funds. The clause allows Aunt Millie's Bakeries to take immediate action to secure the collateral and recoup the outstanding debt.
For a prospective Aunt Millie's Bakeries franchisee, this clause highlights the importance of having a plan for business succession or ensuring adequate life insurance to cover the outstanding loan amount. The franchisee should consider these factors to protect their estate and family from the immediate financial burden of the loan repayment in the event of their death. It is also important to fully understand the terms of the Financing Security Agreement and Promissory Note before entering into the agreement.