Does Aunt Millies Bakeries normally charge interest on accounts receivable?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
ed from the weekly settlement, whether or not DISTRIBUTOR signs said form. DISTRIBUTOR acknowledges and agrees that the charges on Schedule C" (Form IO13) are subject to change by AUNT MILLIE's at any time.
- §3.5 PURCHASE OF RECEIVABLES: AUNT MILLIE'S shall purchase from DISTRIBUTOR, and the DISTRIBUTOR HEREBY sells, assigns and transfers to AUNT MILLIE'S, all of DISTRIBUTOR'S right, title and interest in and to all of DISTRIBUTOR'S properly filled out and executed charge slips, all existing and future Accounts arising from the sale of Products to Chains or Outlets in the Sales Area and all proceeds thereof from the DISTRIBUTOR, at their face value, net of all discounts, free and clear of all liens, security agreements and encumbrances, other than in favor of, or permitted (in writing) by, AUNT MILLIE'S and its principal lender. AUNT MILLIE'S shall credit DISTRIBUTOR'S account therefor. DISTRIBUTOR shall promptly remit all such slips to AUNT MILLIE'S. If any Chain elects to settle with DISTRIBUTOR on the basis of scan results, rather than charge slips, the credit to DISTRIBUTOR shall be adjusted for any difference between the charge slip and the actual sales reflected by the scan sale data. The foregoing sale and purchase shall continue until termination of this Distribution Agreement, or until DISTRIBUTOR gives written notice of the termination of the foregoing sale to AUNT MILLIE'S, or, with respect to specific Accounts only, AUNT MILLIE'S gives notice that such Account's Chain's or Outlet's credit has not been approved by AUNT MILLIE'S.
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to the 2025 Aunt Millies Bakeries FDD, Aunt Millie's purchases accounts receivable from the distributor. Specifically, Aunt Millie's buys all rights, titles, and interests to charge slips and accounts arising from product sales to chains or outlets within the sales area at face value, net of all discounts. This purchase is free and clear of all liens, security agreements, and encumbrances, except those in favor of Aunt Millie's.
Aunt Millie's credits the distributor's account for these receivables, and the distributor must promptly remit all charge slips to Aunt Millie's. If a chain settles based on scan results instead of charge slips, the credit to the distributor is adjusted to reflect the actual sales data. This arrangement continues until the Distribution Agreement terminates, the distributor provides written notice to end the sale, or Aunt Millie's disapproves credit for a specific account.
The FDD mentions that FCAC (First Capital Acceptance Corp.) would pay interest at the current rate on a line of credit, but not greater than 5% annually. However, this appears in Exhibit D, a Bill of Sale, and is not directly linked to the standard purchase of receivables from distributors. The document does not explicitly state that Aunt Millie's charges the distributor interest for purchasing these receivables at face value.