Does Aunt Millies Bakeries require franchisees to file a UCC-1 form?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
- §3.7 SECURITY INTEREST: To secure the payment of any indebtedness or liability of DISTRIBUTOR to AUNT MILLIE'S, now or hereafter arising, pursuant to this Agreement or otherwise, DISTRIBUTOR hereby grants and conveys to AUNT MILLIE'S a continuing and general security interest in the Distribution Rights, all other assets used in connection with the exercise and operation of the Distribution Rights, all rights hereunder and all Products and receivables of the DISTRIBUTOR, and grants to AUNT MILLIE'S the rights of a secured party. DISTRIBUTOR agrees to execute the AUNT MILLIE'S Security Agreement and financing statement(s) to evidence such security interest. Any default under the AUNT MILLIE'S Security Agreement by DISTRIBUTOR shall be a default under this Agreement.
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries' 2025 Franchise Disclosure Document, distributors are required to grant Aunt Millie's a security interest in their distribution rights, assets, and receivables to secure any debts or liabilities. To formalize this security interest, the distributor must execute both the Aunt Millie's Security Agreement and financing statements.
In practical terms, this means that as a condition of the franchise agreement, Aunt Millies Bakeries places a lien on the distributor's business assets. This gives Aunt Millies Bakeries a legal claim to those assets if the distributor fails to meet their financial obligations. The UCC-1 form serves as public notice of this lien, protecting Aunt Millies Bakeries's interest in the distributor's assets.
Therefore, a prospective Aunt Millies Bakeries distributor should understand that they will be required to sign a security agreement and related financing statements, effectively pledging their business assets as collateral to Aunt Millies Bakeries. Failure to comply with these requirements constitutes a breach of the Distribution Agreement.