Is an Aunt Millies Bakeries distributor required to service consistently unprofitable outlets?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
§4.1 RESULTS: DISTRIBUTOR agrees to use its best efforts to develop and maximize sales of Products to Outlets within the Sales Area, by maintaining an adequate and fresh supply of Products in all Outlets; rotating Products to promote their sale before
they become stale or off code; promptly removing all stale or off code Products; cooperating with AUNT MILLIE'S' marketing programs, maintaining a computer assisted record-keeping system compatible with the system maintained by AUNT MILLIE'S now or in the future; and providing service on a basis consistent with good industry practice to all Outlets in the Sales Area requesting service. Distributor is not required to service any Outlet that has proven consistently to be unprofitable, provided that where a Chain requires that such an Outlet be served as a condition for serving its other outlets, the profitability of any Outlet which is part of that Chain shall be judged on the basis of the profitability of the Chain as a whole. Nothing herein shall be deemed to prohibit DISTRIBUTOR from carrying and distributing merchandise for other companies or otherwise engaging in any other business activity, unless and except to the extent that such other merchandise is competitive with products distributed by AUNT MILLIE'S, or could contaminate the Products, or such other business activity is inconsistent with or interferes with the obligations of the DISTRIBUTOR hereunder.
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries's 2025 Franchise Disclosure Document, a distributor is generally not required to service outlets that have consistently proven unprofitable. However, there is an exception to this rule. If a chain requires that all of its outlets be serviced as a condition for serving any of them, the profitability of an outlet within that chain is assessed based on the overall profitability of the entire chain, not the individual outlet. This means that even if a particular store within a chain is unprofitable, the distributor may still be required to service it if the chain as a whole is profitable.
This provision protects Aunt Millies Bakeries's distributors from being forced to serve individual locations that are a drain on their resources. At the same time, it ensures that distributors meet the needs of larger chain clients, which can be crucial for maintaining a strong business. This is a fairly common practice in franchise systems that involve distribution, as franchisors often balance the needs of individual franchisees with the demands of larger accounts.
For a prospective Aunt Millies Bakeries distributor, this clause offers some flexibility in managing their business and focusing on profitable outlets. However, it also introduces a degree of uncertainty, as the distributor's obligations can depend on the policies and profitability of the chains they serve. It would be prudent for a potential franchisee to discuss with Aunt Millies Bakeries how this policy is typically applied in practice and what criteria are used to determine consistent unprofitability.