What does the distributor sell, assign, and transfer to Aunt Millies Bakeries regarding accounts?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
- §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 sells, assigns, and transfers all rights, titles, and interests in charge slips and accounts to Aunt Millie's Bakeries. This includes all existing and future accounts arising from the sale of products to chains or outlets within the sales area, as well as all proceeds from these sales. The transfer is made at face value, net of all discounts, and must be free and clear of all liens, security agreements, and encumbrances, unless otherwise agreed to in writing by Aunt Millie's Bakeries and its principal lender.
This arrangement means that Aunt Millie's Bakeries purchases the distributor's receivables, effectively managing the collection of payments from the chains and outlets. In return, Aunt Millie's Bakeries credits the distributor's account for the face value of the charge slips, adjusted for any differences if the chains settle based on scan results rather than charge slips. The distributor is responsible for promptly submitting all charge slips to Aunt Millie's Bakeries.
The sale and purchase agreement continues until the termination of the Distribution Agreement. However, the distributor can provide written notice to terminate the sale, or Aunt Millie's Bakeries can give notice that a specific account's chain or outlet's credit has not been approved. For the purposes of this section, "Accounts" are defined as accounts under the Uniform Commercial Code in effect in the distributor's state of organization. This arrangement provides Aunt Millie's Bakeries with control over accounts receivable while providing the distributor with prompt credit for sales.