What does 'Distribution Rights' mean for an Aunt Millies Bakeries distributor?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
celing and surrendering DISTRIBUTOR'S rights under this Agreement and releasing any and all claims against AUNT MILLIE'S and its officers, directors, shareholders, employees, successors and assigns arising under or out of this Agreement, and AUNT
- MILLIE'S shall execute a new Distribution Agreement with the purchaser in the form of agreement then being used by AUNT MILLIE'S.
- §7.5 PAYMENT OF FEE: In the event of a sale or transfer by DISTRIBUTOR, or by AUNT MILLIE'S for the account of DISTRIBUTOR, of all or any portion of the Distribution Rights, DISTRIBUTOR shall pay a Transfer Fee to AUNT MILLIE'S in an amount equal to TWO PERCENT (2%) of the sales price, in full consideration for the administrative activities undertaken by AUNT MILLIE'S in connection therewith.
- §7.6 EQUITY PAYMENT SCHEDULE: In the event of a sale or transfer by DISTRIBUTOR, where DISTRIBUTOR has equity in its Distribution Rights (where the value of DISTRIBUTOR's Distribution Rights and/or DISTRIBUTOR's routes sold or transferred exceeds the balance due from DISTRIBUTOR under any promissory notes to AUNT MILLIE's or to any third party), the equity will be paid to DISTRIBUTOR according to the payment schedule set forth on Schedule "D."
ARTICLE 8
SERVICE FAILURES AND CHANGES
§§8.1 TEMPORARY SERVICE BY AUNT MILLIE'S : If DISTRIBUTOR is not able to or does not perform the obligations imposed by this Agreement, DISTRIBUTOR shall make other adequate provision for such performance at its expense. If no such provision is made, AUNT MILLIE'S, within the limits of its ability to do so, may make arrangements to have these obligations performed for the account of DISTRIBUTOR, charging to DISTRIBUTOR the reasonable expenses of such performance. Such temporary performance shall not relieve DISTRIBUTOR of any of the obligations imposed by this Agreement, constitute an assumption by AUNT MILLIE'S of any obligations of DISTRIBUTOR, nor act to cure any default that may exist on the part of DISTRIBUTOR by reason of such non performance.
§8.2 CHANGE IN DELIVERY METHOD: In the event any Outlet makes the determination to require delivery or merchandising of the Products by any method other than Direct Store Delivery, and so informs AUNT MILLIE'S or DISTRIBUTOR, AUNT MILLIE'S shall thereafter be permitted to sell Products directly to such Outlet, which action shall not be deemed to violate DISTRIBUTOR'S rights hereunder and DISTRIBUTOR shall not be entitled to any proceeds derived from such service by AUNT MILLIE'S. For example, if an Outlet desires to merchandise Products itself or through a third party other than DISTRIBUTOR for any reason and so informs AUNT MILLIE'S, it shall not be a breach of this Agreement if AUNT MILLIE'S thereafter sells Products directly to such Outlet. Further, DISTRIBUTOR shall not be entitled to any compensation from AUNT MILLIE'S in such instance. However, DISTRIBUTOR shall continue to own those Distribution Rights associated with such an Outlet. Using the previous example, if said Outlet desires to reinstate merchandising of Products through AUNT MILLIE'S, then DISTIBUTOR shall have the exclusive right to provide those services on AUNT MILLIE'S behalf to such Outlet.
ARTICLE 9 TERMINATION
- §9.1 BREACH: Except as set forth in this Article, or upon the sale or transfer of all of the DISTRIBUTOR'S Distribution Rights, this Agreement shall not be terminated or canceled, provided DISTRIBUTOR carries out the terms hereof.
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries' 2025 Franchise Disclosure Document, 'Distribution Rights' refer to the ownership a distributor has, which continues until the rights are sold or transferred. The distributor can sell or transfer these rights, either in whole or in part, but it is subject to Aunt Millie's Bakeries' prior written approval and a right of first refusal. If the distributor decides to sell, Aunt Millie's Bakeries has the option to match the offer made by another potential buyer.
In the event of a sale or transfer of distribution rights, the distributor must pay Aunt Millie's Bakeries a transfer fee equal to 2% of the sales price. This fee compensates Aunt Millie's Bakeries for the administrative work involved in the transfer. If the distributor has equity in their distribution rights (meaning the value of the rights exceeds any outstanding debts to Aunt Millie's Bakeries), the equity will be paid to the distributor according to a payment schedule outlined in Schedule D of the Distribution Agreement.
Aunt Millie's Bakeries also retains a security interest in the distribution rights to secure any debts or liabilities the distributor owes to them. This means Aunt Millie's Bakeries has a legal claim on the distribution rights as collateral. The distributor is obligated to use its best efforts to maximize sales of Aunt Millie's Bakeries' products within their designated sales area, ensuring an adequate and fresh supply of products in all outlets. The distributor is also responsible for rotating products to ensure they are sold before their expiration dates.