What is the Aunt Millies Bakeries distributor required to do regarding the title to the Collateral?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
DISTRIBUTOR agrees that Non-Recurring Charges noted on Form IO13 attached to this Agreement as Schedule "C" will be assessed and deducted from the weekly settlement, whether or not DISTRIBUTOR signs said form.
DISTRIBUTOR acknowledges and agrees that the charges on Schedule C" (Form IO13) are subject to change by AUNT MILLIE's at any time.
- §3.5 PURCHASE OF RECEIVABLES: AUNT MILLIE'S shall purchase from DISTRIBUTOR, and the DISTRIBUTOR HEREBY sells, assigns and transfers to AUNT MILLIE'S, all of DISTRIBUTOR'S right, title and interest in and to all of DISTRIBUTOR'S properly filled out and executed charge slips, all existing and future Accounts arising from the sale of Products to Chains or Outlets in the Sales Area and all proceeds thereof from the DISTRIBUTOR, at their face value, net of all discounts, free and clear of all liens, security agreements and encumbrances, other than in favor of, or permitted (in writing) by, AUNT MILLIE'S and its principal lender.
AUNT MILLIE'S shall credit DISTRIBUTOR'S account therefor.
DISTRIBUTOR shall promptly remit all such slips to AUNT MILLIE'S.
If any Chain elects to settle with DISTRIBUTOR on the basis of scan results, rather than charge slips, the credit to DISTRIBUTOR shall be adjusted for any difference between the charge slip and the actual sales reflected by the scan sale data.
The foregoing sale and purchase shall continue until termination of this Distribution Agreement, or until DISTRIBUTOR gives written notice of the termination of the foregoing sale to AUNT MILLIE'S, or, with respect to specific Accounts only, AUNT MILLIE'S gives notice that such Account's Chain's or Outlet's credit has not been approved by AUNT MILLIE'S.
For purposes of this Section 3.5, "Accounts" shall
mean accounts as defined in the Uniform Commercial Code as in effect in the state of organization of Distributor.
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries' 2025 Franchise Disclosure Document, the distributor is required to sell, assign, and transfer to Aunt Millie's all rights, titles, and interests in their charge slips and accounts receivable. This includes existing and future accounts arising from product sales to chains or outlets within the sales area, and all proceeds from these sales. This transfer must be free and clear of all liens, security agreements, and encumbrances, unless otherwise agreed to in writing by Aunt Millie's and its principal lender.
This arrangement ensures that Aunt Millie's maintains control over the receivables generated by the distributor's sales. By purchasing the receivables, Aunt Millie's credits the distributor's account, streamlining the financial transactions between the two parties. The distributor is obligated to promptly remit all charge slips to Aunt Millie's, allowing for efficient processing and reconciliation of accounts. If a chain chooses to settle based on scan results rather than charge slips, the distributor's credit will be adjusted to reflect the actual sales data.
The sale and purchase of receivables continue until the termination of the Distribution Agreement, or until either the distributor provides written notice to terminate the sale to Aunt Millie's, or Aunt Millie's notifies the distributor that a specific account's chain or outlet credit has not been approved. This provision allows for flexibility and adjustments based on the ongoing business relationship and creditworthiness of the accounts. For the purposes of this section, "Accounts" are defined according to the Uniform Commercial Code in the distributor's state of organization.
This requirement is a significant aspect of the financial relationship between Aunt Millie's and its distributors. Prospective franchisees should understand the implications of assigning their receivables to Aunt Millie's, including the potential impact on their cash flow and financial management. It is essential to carefully review the terms and conditions related to the purchase of receivables and seek clarification on any aspects that may be unclear or concerning.