What is the distributor required to do following termination of the agreement with Aunt Millies Bakeries?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
- §9.4 ACTIONS FOLLOWING TERMINATION: Termination under either Section 9.2 or Section 9.3 above, shall entitle AUNT MILLIE'S to operate the business for the account of the DISTRIBUTOR, deducting from the revenues generated the reasonable expenses of such performance and delivering the balance, if any, to DISTRIBUTOR. Termination shall require DISTRIBUTOR to sell the Distribution Rights, and in the event that DISTRIBUTOR has not consummated a sale to a qualified purchaser within 90 days of the date of termination, AUNT MILLIE'S shall be authorized to sell DISTRIBUTOR'S Distribution Rights to such a purchaser at the best price which can be obtained after proper notice and advertisement. Said sale shall be for the account of the DISTRIBUTOR, and the provisions of Sections 7.3, 7.4 and 7.5 hereof shall apply.
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries' 2025 Franchise Disclosure Document, upon termination of the Distribution Agreement, the distributor is required to sell the Distribution Rights. If the distributor does not complete a sale to a qualified purchaser within 90 days of termination, Aunt Millies Bakeries is authorized to sell the distributor's rights. This sale will be conducted at the best obtainable price after providing proper notice and advertisement. The sale is for the distributor's account, and the provisions of Sections 7.3, 7.4, and 7.5 apply to the sale.
In practical terms, this means that if a distributor's agreement with Aunt Millies Bakeries is terminated, the distributor must sell their rights to another party. The distributor has a 90-day window to find a buyer who meets Aunt Millies Bakeries' qualifications. If the distributor fails to find a buyer within this period, Aunt Millies Bakeries takes over the sale process.
Aunt Millies Bakeries will then attempt to sell the distribution rights at the best possible price, ensuring they provide adequate notice and advertise the sale appropriately. The proceeds from this sale, after deducting any expenses incurred by Aunt Millies Bakeries during the process, will be given to the former distributor. This process ensures that the distribution rights are transferred efficiently and fairly, even if the distributor is unable to manage the sale themselves.
This requirement protects Aunt Millies Bakeries by ensuring continued operation within the sales area, while also providing the distributor with a method to recoup some of their initial investment in the distribution rights. The application of Sections 7.3, 7.4, and 7.5 suggests that the sale process will follow specific guidelines detailed elsewhere in the agreement, which likely cover aspects such as valuation, approval of the purchaser, and transfer procedures.