How does Aunt Millies Bakeries handle the gain on the sale of territories to IOs?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
Offeror on the terms of the Offer.
§7.2 SALE OF STOCK: The transfer of a controlling interest in Distributor shall be deemed a transfer of the Distribution Rights and shall be subject to all of the terms and conditions of this Article 7.
§7.3 PROCEEDS: Any sale shall be for the account of DISTRIBUTOR, and the proceeds of the sale, after deducting therefrom any monies owed by DISTRIBUTOR to AUNT MILLIE'S, a reasonable reserve against open accounts, all reasonable costs and expenses in connection with the sale (including without limitation the cost of removing any off code or damaged Products in DISTRIBUTOR'S Sales Area) and the satisfying of any outstanding debts, liens, security interests, legal fees and similar expenses, shall be turned over to DISTRIBUTOR.
§7.4 TRANSFER DOCUMENTS: In the event of a sale or transfer by or for the account of DISTRIBUTOR as described in this Article 7, DISTRIBUTOR shall execute an appropriate bill of sale to the purchaser, and a general release terminating, canceling and surrendering DISTRIBUTOR'S rights under this Agreement and releasing any and all claims against AUNT MILLIE'S and its officers, directors, shareholders, employees, successors and assigns arising under or out of this Agreement, and AUNT
MILLIE'S shall execute a new Distribution Agreement with the purchaser in the form of agreement then being used 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, when a distributor sells their distribution rights, the sale is for the distributor's account. After deducting any monies owed to Aunt Millie's, a reasonable reserve against open accounts, all reasonable costs and expenses in connection with the sale (including removing any off-code or damaged products), and the satisfying of any outstanding debts, liens, security interests, legal fees, and similar expenses, the proceeds are turned over to the distributor.
In the event of a sale or transfer by the distributor, Aunt Millies Bakeries will receive a transfer fee equal to 2% of the sales price. This fee is in full consideration for the administrative activities undertaken by Aunt Millie's Bakeries in connection with the sale.
Furthermore, if the distributor has equity in their distribution rights (meaning the value of the distribution rights and/or routes exceeds the balance due under any promissory notes to Aunt Millie's or any third party), the equity will be paid to the distributor according to the payment schedule set forth on Schedule "D."