What is the purpose of Exhibit (H)(2) UCC-1 for Aunt Millies Bakeries?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
6809, phone: 260/424-8245 | | John Joseph West III, 1600 Russell Street, Covington, KY 41011, phone 513/335-1195 | | Michael Orkis, 1020 Claycraft Rd, Gahanna, OH 43230, phone 614/580-2682 | | Timothy G. Lester, 1020 Claycraft Road, Columbus, Ohio 43230, phone: 614/256-3907 | | Brian D. Fanelli, 2900 Westchester Avenue, Purchase, New York 10577, phone 914/ 696-7500 | | | | I have received a Franchise Disclosure Document with an issuance date of January 29, 2024, and as registered in the states noted on | | Exhibit N effective on the dates shown. This Franchise Disclosure Document includes the following Exhibits: | | |
| Exhibit A - State Regulators; Agents for Service | Exhibit H – | |
|---|---|---|
| of Process | (1) Aunt Millie's Bakeries Security Agreement; and | |
| Exhibit B-Financing Documents from First Capital | (2) UCC-1 (Representative Sample) | |
| Acceptance Corp. |
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to the 2025 Aunt Millies Bakeries FDD, Exhibit H contains two documents: (1) Aunt Millie's Bakeries Security Agreement and (2) a UCC-1 (Representative Sample). Exhibit (H)(2) specifically refers to a UCC-1 form, which is a Uniform Commercial Code financing statement. The FDD states this directly in Exhibit (H). The purpose of a UCC-1 filing is to provide public notice that Aunt Millies Bakeries has a security interest in some of the franchisee's assets.
In the context of a franchise agreement, this security interest typically covers items such as equipment, inventory, accounts receivable, and other business assets. By filing a UCC-1, Aunt Millies Bakeries establishes its priority claim to those assets in case the franchisee defaults on their obligations, such as loan payments or adherence to the franchise agreement terms. This protects Aunt Millies Bakeries' financial interests by ensuring they have a legal claim to the franchisee's assets, which can be repossessed and sold to recover outstanding debts.
The inclusion of a 'representative sample' suggests that the actual UCC-1 form will vary depending on the specific assets and location of the franchisee's business. Prospective franchisees should carefully review the Aunt Millie's Bakeries Security Agreement (Exhibit H(1)) and understand which assets will be subject to the security interest. They should also consult with a legal professional to fully understand the implications of granting a security interest and the potential consequences of default.