What forward purchase commitment contracts does Aunt Millies Bakeries routinely enter into?
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.
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries' 2025 Franchise Disclosure Document, the company engages in a "Purchase of Receivables" agreement with its distributors. This arrangement involves Aunt Millies Bakeries purchasing all of the distributor's rights, titles, and interests related to charge slips and accounts arising from product sales to chains or outlets within the designated sales area. The purchase occurs at face value, after deducting any discounts, and is free of liens or encumbrances, except those favored by Aunt Millies Bakeries.
This agreement means that Aunt Millies Bakeries essentially buys the accounts receivable from the distributor, crediting the distributor's account accordingly. The distributor is then responsible for promptly submitting all charge slips to Aunt Millies Bakeries. If a chain chooses to settle payments based on scan results instead of charge slips, the distributor's credit is adjusted to reflect any differences between the charge slip and the actual sales data from the scan.
The "Purchase of Receivables" continues until the Distribution Agreement is terminated, the distributor provides written notice to end the sale, or Aunt Millies Bakeries notifies the distributor that a specific account's credit has not been approved. This arrangement provides Aunt Millies Bakeries with control over the receivables and potentially streamlines the payment process, while the distributor receives immediate credit for their sales, albeit subject to adjustments and potential termination of the agreement.