What happens if Aunt Millies Bakeries withholds approval of a transfer of distribution rights?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
- §7.1 CONDITIONS OF ASSIGNABILITY: The Distribution Rights are owned by the DISTRIBUTOR and may be sold or otherwise transferred in whole or in part by DISTRIBUTOR, provided that any such sale or transfer shall be subject to: (a) the prior written approval of AUNT MILLIE'S, which approval will not be unreasonably withheld; and (b) a right of first refusal on the part of AUNT MILLIE'S at the same terms and conditions offered to DISTRIBUTOR (the "Offer") by a bona fide purchaser or transferee (the "Offeror"). The right of approval and right of refusal referred to herein shall expire unless DISTRIBUTOR is notified by AUNT MILLIE'S that it does not approve the Offeror or that it wishes to exercise its right of first refusal by notice given within ten (10) business days after the last to occur of the following:
- i. receipt by AUNT MILLIE'S of written notice of intent to sell or transfer to a named Offeror on terms and conditions fully set forth in such notice; and
- ii. a personal interview of the Offeror's controlling shareholder by a designated AUNT MILLIE'S representative; and
- iii. receipt by AUNT MILLIE'S of the Offeror's and Offeror's controlling shareholder's current financial statements and such additional information as is relevant concerning the Offeror's and Offeror's controlling shareholder's financial condition, health, credit, driving record, and other matters reasonably appropriate to AUNT MILLIE'S' determination. If the contemplated sale or transfer is not a bona fide transfer for value, the price to be paid by AUNT MILLIE'S shall be the fair market value of the Distribution Rights at the time of receipt of such notice of intent. If AUNT MILLIE'S right of approval and right of first refusal expire as provided above DISTRIBUTOR may consummate the transfer to the Offeror on the terms of the Offer.
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's Distribution Rights are assignable, contingent upon Aunt Millie's prior written approval, which will not be unreasonably withheld. Aunt Millie's also retains a right of first refusal based on the terms offered to the distributor by a prospective buyer.
Specifically, Aunt Millie's has ten business days to notify the distributor whether it disapproves of the potential buyer or intends to exercise its right of first refusal. This ten-day period begins after Aunt Millie's receives written notice of the intended sale, a personal interview with the buyer's controlling shareholder, and the buyer's financial statements and other relevant information.
If Aunt Millie's fails to act within this timeframe by either disapproving the Offeror or exercising its right of first refusal, both the right of approval and the right of first refusal expire. In this case, the distributor is then free to proceed with the transfer to the Offeror under the agreed-upon terms.