Does Aunt Millies Bakeries require a personal guaranty for the DSA Promissory Note?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
and Form UCC-1 Financing Statement).
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- Guaranty. DSA does not require a personal guaranty of the DSA Promissory Note.
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- Prepayment. You may prepay the loan with no penalty (DSA Promissory Note, §4).
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- Liability Upon Default. Upon default, DSA may, without notice, demand or presentment, declare the entire principal balance of the note immediately due and payable. This balance due shall bear an interest rate of 16% per year (calculated on the basis of a 360-day year). Upon the commencement of any proceeding under any bankruptcy, insolvency or debtor relief laws by or against you, the note principal and interest will automatically be due and payable immediately, without notice, demand or presentment of any kind. You must pay all of Lender's costs and expense of collection, including reasonable attorneys' fees and expenses (DSA Promissory Note, §§6 and 7).
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- Late Charges. If DSA has not received the full amount of any monthly payment by the end of 15 calendar days after the due date, DSA will charge a late charge fee in the amount of 5% of the overdue monthly payment (DSA Promissory Note, §7.a.).
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- Loss of Legal Right Upon Default. Upon default, you waive your right to presentment, demand for payment, protest, notice of dishonor, notice of protest and notice of default of the note (DSA Promissory Note, §7.c.).
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- Closing. At closing, you must pay
Source: Item 10 — FINANCING (FDD pages 21–24)
What This Means (2025 FDD)
According to Aunt Millies Bakeries's 2025 Franchise Disclosure Document, a personal guaranty is not required for the DSA Promissory Note. Aunt Millie's Bakeries has made arrangements through Distribution Services of America, Inc. (DSA) to offer optional financing covering 10% of the initial franchise fee. This financing option is independent of Aunt Millie's Bakeries, and the company does not endorse or guarantee it.
The DSA Promissory Note outlines several terms, including the annual percentage rate, which is established 30 days before closing, and a 5-year repayment period. In the event of default, DSA can declare the entire principal balance immediately due, with an interest rate of 16% per year calculated on a 360-day basis. Additionally, a late charge of 5% applies to overdue monthly payments not received within 15 calendar days of the due date. At closing, a $400 loan origination fee is payable to DSA.
For prospective franchisees, this means that while financing is available through DSA for a portion of the franchise fee, it is not mandatory, and Aunt Millie's Bakeries plays no direct role in the financing agreement. The absence of a personal guaranty reduces the personal financial risk to the franchisee, but the loan is secured by the franchise rights and related assets. Franchisees should carefully review the DSA Financing Documents, referenced as Exhibit J in the FDD, to fully understand the terms and conditions of the loan.