What obligations are secured by the security agreement for Aunt Millies Bakeries?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
ENT,** made effective ___________, 20___, by and between Distribution Services of America, Inc., a Florida corporation with offices at 2900 Westchester Avenue, Purchase, New York (herein called the "Secured Party") and DISTRIBUTOR'S CORPORATE NAME, residing at DISTRIBUTOR'S ADDRESS, (herein called the "Borrower").
W I T N E S S E T H :
In consideration of the premises and agreements contained herein and other good and valuable consideration, the sufficiency and receipt of which is hereby acknowledged, the parties agree as follows:
- 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,
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries's 2025 Franchise Disclosure Document, the security agreement secures the distributor's debts and liabilities to Aunt Millie's. This includes the outstanding principal and interest on any promissory notes, as well as all debts, liabilities, obligations, covenants, and agreements outlined in the Financing Security Agreement.
To ensure the fulfillment of these obligations, the distributor grants Aunt Millie's a security interest in several assets. These assets include any rights the distributor has under their Distributor's Agreement with Perfection Bakeries, all equipment, inventory, accounts, goods, property, contract rights, chattel paper, and general intangibles related to the distributor's business. This also extends to any accessions, replacements, and additions to these items, as well as all cash and non-cash proceeds, including insurance proceeds, derived from these assets.
This security interest gives Aunt Millie's certain rights as a secured party, allowing them to claim these assets in the event the distributor defaults on their obligations. The distributor is also required to execute financing statements to further evidence this security interest. Any default by the distributor under the Aunt Millie's Security Agreement will also be considered a default under the Distribution Agreement, potentially leading to further repercussions.
For a prospective Aunt Millie's Bakeries franchisee, this means that a significant portion of their business assets could be at risk if they fail to meet their financial obligations to the company. It is crucial to fully understand the terms of the Security Agreement and the potential consequences of default before entering into a franchise agreement with Aunt Millie's Bakeries.