What is included in the definition of 'collateral' for the security interest granted to Aunt Millies Bakeries?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
- 1. GRANT OF SECURITY INTEREST: To secure the full and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of each of the Obligations (as hereafter defined), the Borrower hereby grants, conveys, assigns and transfers to Secured Party a security interest in and to the following personal property:
- a) any and all rights that the Borrower may have under the Distributor's Agreement between PERFECTION BAKERIES, INC., d/b/a AUNT MILLIE'S and Borrower;
- b) all equipment, inventory, accounts, goods, property, contract rights, chattel paper and general intangibles related to or arising from Borrower's business, whether now or hereafter existing or acquired and wherever located;
- c) any and all accessions, replacements and additions to or of the foregoing; and
- d) all cash or non-cash proceeds (including insurance proceeds) of the foregoing, the items described in a), b), c), and d) above being hereinafter collectively referred to as the "collateral".
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries' 2025 Franchise Disclosure Document, the collateral for the security interest granted to them includes several categories of assets. These include any rights the borrower (the franchisee) has under the Distributor's Agreement with Perfection Bakeries, Inc., which operates as Aunt Millie's. This means the franchisee's contractual rights to distribute Aunt Millie's products are part of the collateral.
Additionally, the collateral encompasses all equipment, inventory, accounts, goods, property, contract rights, chattel paper, and general intangibles related to or arising from the franchisee's business. This is a broad category that would likely include delivery vehicles, unsold baked goods, customer accounts, and any other assets used in the operation of the Aunt Millie's distribution business. The collateral also includes any additions or replacements to these items, ensuring that the security interest remains comprehensive as the franchisee's business evolves.
Finally, the collateral includes all cash and non-cash proceeds from the aforementioned assets, including insurance proceeds. This means that if the franchisee sells equipment or receives insurance payments for damaged property, those funds also become part of the collateral securing the obligations to Aunt Millie's. This definition ensures that Aunt Millie's has a comprehensive security interest in a wide range of the franchisee's business assets, providing them with significant protection in the event of a default on the franchisee's obligations.