How are notes receivable entered into by Aunt Millies Bakeries?
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. For purposes of this Section 3.5, "Accounts" shall
mean accounts as defined in the Uniform Commercial Code as in effect in the state of organization of Distributor.
- §3.6 PROMOTION PARTICIPATION PROGRAM: In cases where DISTRIBUTOR wishes to sell Products to Outlets at prices which are less than those reflected on AUNT MILLIE'S' then current Suggested Price List, and AUNT MILLIE'S, at the DISTRIBUTOR'S request, agrees to participate in such promotion or discount price, AUNT MILLIE'S will contribute to the promotion or discount in accordance with its Promotion Participation Policy as amended from time to time.
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries' 2025 Franchise Disclosure Document, the company purchases receivables from its distributors. Specifically, Aunt Millie's purchases all rights, titles, and interests to charge slips and accounts arising from product sales to chains or outlets within the distributor's sales area. This transfer occurs at face value, net of any discounts, and is free of liens or encumbrances, except those in favor of Aunt Millie's. Aunt Millie's credits the distributor's account for these receivables.
The distributor is obligated to promptly remit all charge slips to Aunt Millie's. If a chain chooses to settle 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 termination of the Distribution Agreement or if either the distributor provides written notice to end the sale, or Aunt Millie's notifies the distributor that a specific account's credit is not approved.
Furthermore, to secure any debts or liabilities of the distributor to Aunt Millie's, the distributor grants Aunt Millie's a continuing security interest in the distribution rights, assets, and receivables. The distributor must also execute Aunt Millie's Security Agreement and financing statements to formalize this security interest. A default under this security agreement constitutes a default under the overall Distribution Agreement.