What is the primary obligation secured by the Financing 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' 2025 Franchise Disclosure Document, the Financing Security Agreement primarily secures the full payment and performance of all obligations when due. This includes the outstanding principal and all interest on the Promissory Note, which is of even date with the agreement, and is in the original principal amount of a loan. The agreement also covers all debts, liabilities, obligations, covenants, and agreements of the borrower as outlined in the Financing Security Agreement itself.
In practical terms, this means that if a franchisee borrows money to finance their Aunt Millies Bakeries distribution rights, this agreement ensures Aunt Millie's has a legal claim on the franchisee's assets if they fail to meet their financial obligations. The security interest extends to various forms of collateral, including the franchisee's rights under the Distributor's Agreement with Perfection Bakeries, all equipment, inventory, accounts, goods, property, contract rights, chattel paper, and general intangibles related to the franchisee's business. It also covers any accessions, replacements, and additions to these items, as well as any cash or non-cash proceeds, including insurance proceeds, derived from them.
For a prospective Aunt Millies Bakeries franchisee, this highlights the importance of understanding all the terms of the Financing Security Agreement and the Promissory Note before signing. It is crucial to assess one's ability to meet the repayment obligations, as failure to do so could result in the loss of business assets. The franchisee should seek legal and financial advice to fully comprehend the implications of granting a security interest in their business assets to Aunt Millie's.
This agreement ensures that Aunt Millie's Bakeries has a secured position in case of franchisee default, protecting their financial interests. Franchisees should carefully consider the risks associated with this type of financing arrangement and ensure they have a solid business plan to meet their obligations.