What can the proceeds of the Aunt Millies Bakeries Collateral be applied to?

According to Aunt Millies Bakeries' 2025 Franchise Disclosure Document, the proceeds from the sale of a distributorship are handled in a specific order. The proceeds from any sale of the distributorship will first be used to settle any outstanding financial obligations the distributor has with Aunt Millies Bakeries. This includes any unpaid monies, a reasonable reserve to cover open accounts, and all reasonable costs associated with the sale itself. These costs can include the expense of removing any damaged or expired products from the distributor's sales area.

After covering the debts to Aunt Millies Bakeries and the costs of the sale, the proceeds are then used to satisfy any outstanding debts, liens, security interests, legal fees, and similar expenses that the distributor has incurred. This ensures that any other secured creditors or legal obligations are addressed before the distributor receives the remaining funds.

Finally, after all of the above obligations are met, any remaining proceeds from the sale are then turned over to the distributor. This process ensures that Aunt Millies Bakeries and other relevant parties are made whole before the distributor receives any funds from the sale of their distribution rights. This is a fairly standard practice in franchising, as it protects the franchisor's financial interests and ensures a smooth transition of ownership.