Is an Aunt Millies Bakeries distributor required to execute financing statements?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
request, agrees to participate in such promotion or discount price, AUNT MILLIE'S will contribute to the promotion or discount in accordance with its Promotion Participation Policy as amended from time to time.
- §3.7 SECURITY INTEREST: To secure the payment of any indebtedness or liability of DISTRIBUTOR to AUNT MILLIE'S, now or hereafter arising, pursuant to this Agreement or otherwise, DISTRIBUTOR hereby grants and conveys to AUNT MILLIE'S a continuing and general security interest in the Distribution Rights, all other assets used in connection with the exercise and operation of the Distribution Rights, all rights hereunder and all Products and receivables of the DISTRIBUTOR, and grants to AUNT MILLIE'S the rights of a secured party. DISTRIBUTOR agrees to execute the AUNT MILLIE'S Security Agreement and financing statement(s) to evidence such security interest. Any default under the AUNT MILLIE'S Security Agreement by DISTRIBUTOR shall be a default under this Agreement.
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to the 2025 Aunt Millies Bakeries FDD, a distributor is required to execute financing statements. Specifically, to secure any indebtedness or liability to Aunt Millie's, the distributor grants a security interest in their distribution rights, assets, and receivables. To formalize this security interest, the distributor must sign Aunt Millie's Security Agreement and financing statements.
This requirement means that Aunt Millie's has a legal claim on the distributor's business assets, which could include the rights to sell and distribute products, customer lists, and accounts receivable. This security interest protects Aunt Millie's in case the distributor defaults on payments or other obligations. The distributor's failure to comply with the Aunt Millie's Security Agreement constitutes a breach of the Distribution Agreement.
Furthermore, if a distributor obtains financing from a third party, such as First Capital Acceptance Corp. (FCAC), they may be required to execute additional financing security agreements. These agreements grant the lender a security interest in the distributor's assets, and the distributor covenants to execute all proper financing statements for filing. This ensures the lender's claim is legally recorded and protected.
In the event of a sale, the distributor must ensure that any outstanding debts, liens, and security interests are satisfied from the sale proceeds before the remaining funds are turned over to the distributor. This highlights the importance of understanding the financial obligations and security interests associated with the Aunt Millies Bakeries distributorship.