What happens to the note if the borrower of an Aunt Millies Bakeries franchise dies?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
wer. If a refund reduces principal, the reduction will be treated as a partial pre-payment.
6. EVENTS OF DEFAULT
This Note, and all other obligations of the Borrower to Note Holder, shall be and become immediately due and payable at the option of the Note Holder, without any demand or notice whatsoever, upon the occurrence of any of the following described events, each of which shall
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to the 2025 Aunt Millies Bakeries FDD, the death of the borrower constitutes a default on the promissory note. Upon the borrower's death, the note holder has the option to demand immediate payment of all outstanding obligations, including principal and interest, without any prior notice or demand. This clause is a standard inclusion in loan agreements to protect the lender's interests in the event of the borrower's death.
This provision means that the franchisee's estate or heirs may be responsible for settling the debt immediately. If the estate lacks sufficient funds, the note holder can pursue the collateral pledged as security for the loan. The collateral may include assets such as the rights under the Distributor's Agreement, equipment, inventory, accounts, and any proceeds from the business.
Prospective Aunt Millies Bakeries franchisees should be aware of this clause and consider life insurance or other financial planning strategies to ensure that their estate can manage the debt in the event of their death. Understanding the implications of this default provision is crucial for franchisees to make informed decisions and protect their families and assets.