What is the inventory valuation method used by Aunt Millies Bakeries?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
AUNT MILLIE'S further agrees to repurchase at DISTRIBUTOR'S cost, and give full credit for, any damaged or off code Product which is not damaged or off code by reason of DISTRIBUTOR'S negligence, and which has been promptly returned to a reasonable location designated by AUNT MILLIE'S in accordance with AUNT MILLIE'S' then current stale and damage repurchase policy. AUNT MILLIE'S reserves the right to make reasonable amendments to such stale and damage repurchase policy from time to time.
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the FDD does not explicitly state the inventory valuation method used by Aunt Millies Bakeries. However, it does mention that Aunt Millie's sells products to distributors, and title to the products passes to the distributor upon delivery. Aunt Millie's also agrees to repurchase damaged or off-code products at the distributor's cost, providing full credit, as long as the damage or "off code" status isn't due to the distributor's negligence. This repurchase is subject to Aunt Millie's stale and damage repurchase policy, which they can amend.
Because the FDD does not specify the exact inventory valuation method, it is important for a prospective franchisee to ask Aunt Millies Bakeries directly about their inventory valuation practices. Understanding how inventory is valued is crucial for financial planning and assessing the profitability of the franchise.
Specifically, a potential franchisee should inquire about whether Aunt Millies Bakeries uses methods like FIFO (First-In, First-Out), LIFO (Last-In, First-Out), or weighted average cost to value their inventory. Knowing the valuation method will help in understanding the true cost of goods sold and the potential impact on profitability. Additionally, understanding the details of the "stale and damage repurchase policy" is important to understand potential losses and how they are accounted for.