What rights are included in the 'Distribution Rights' that Aunt Millies Bakeries transfers to the distributor?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
ARTICLE 7 TRANSFER OF RIGHTS
- §7.1 CONDITIONS OF ASSIGNABILITY: The Distribution Rights are owned by the DISTRIBUTOR and may be sold or otherwise transferred in whole or in part by DISTRIBUTOR, provided that any such sale or transfer shall be subject to: (a) the prior written approval of AUNT MILLIE'S, which approval will not be unreasonably withheld; and (b) a right of first refusal on the part of AUNT MILLIE'S at the same terms and conditions offered to DISTRIBUTOR (the "Offer") by a bona fide purchaser or transferee (the "Offeror"). The right of approval and right of refusal referred to herein shall expire unless DISTRIBUTOR is notified by AUNT MILLIE'S that it does not approve the Offeror or that it wishes to exercise its right of first refusal by notice given within ten (10) business days after the last to occur of the following:
- i. receipt by AUNT MILLIE'S of written notice of intent to sell or transfer to a named Offeror on terms and conditions fully set forth in such notice; and
- ii. a personal interview of the Offeror's controlling shareholder by a designated AUNT MILLIE'S representative; and
- iii. receipt by AUNT MILLIE'S of the Offeror's and Offeror's controlling shareholder's current financial statements and such additional information as is relevant concerning the Offeror's and Offeror's controlling shareholder's financial condition, health, credit, driving record, and other matters reasonably appropriate to AUNT MILLIE'S' determination. If the contemplated sale or transfer is not a bona fide transfer for value, the price to be paid by AUNT MILLIE'S shall be the fair market value of the Distribution Rights at the time of receipt of such notice of intent. If AUNT MILLIE'S right of approval and right of first refusal expire as provided above DISTRIBUTOR may consummate the transfer to the Offeror on the terms of the Offer.
- §7.2 SALE OF STOCK: The transfer of a controlling interest in Distributor shall be deemed a transfer of the Distribution Rights and shall be subject to all of the terms and conditions of this Article 7.
- §7.3 PROCEEDS: Any sale shall be for the account of DISTRIBUTOR, and the proceeds of the sale, after deducting therefrom any monies owed by DISTRIBUTOR to AUNT MILLIE'S, a reasonable reserve against open accounts, all reasonable costs and expenses in connection with the sale (including without limitation the cost of removing any off code or damaged Products in DISTRIBUTOR'S Sales Area) and the satisfying of any outstanding debts, liens, security interests, legal fees and similar expenses, shall be turned over to DISTRIBUTOR.
- §7.4 TRANSFER DOCUMENTS: In the event of a sale or transfer by or for the account of DISTRIBUTOR as described in this Article 7, DISTRIBUTOR shall execute an appropriate bill of sale to the purchaser, and a general release terminating, canceling and surrendering DISTRIBUTOR'S rights under this Agreement and releasing any and all claims against AUNT MILLIE'S and its officers, directors, shareholders, employees, successors and assigns arising under or out of this Agreement, and AUNT
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries' 2025 Franchise Disclosure Document, the distributor owns the Distribution Rights, which continue until sold or transferred. The Distribution Rights must be exercised in compliance with the terms of the Distribution Agreement, and any termination of the agreement requires the distributor, or Aunt Millies Bakeries for the account of the distributor, to sell such Distribution Rights.
The distributor can sell or transfer the Distribution Rights in whole or in part, provided that Aunt Millies Bakeries gives prior written approval, which will not be unreasonably withheld. Aunt Millies Bakeries also has a right of first refusal at the same terms and conditions offered to the distributor by a purchaser or transferee. The approval and first refusal rights expire if Aunt Millies Bakeries does not notify the distributor within ten business days after receiving notice of intent to sell, including the terms, and after a personal interview of the purchaser's controlling shareholder.
The transfer of a controlling interest in the distributor is considered a transfer of the Distribution Rights and is subject to the same terms and conditions. In the event of a sale or transfer, the proceeds are for the account of the distributor, after deducting any monies owed to Aunt Millies Bakeries, a reasonable reserve against open accounts, all reasonable costs and expenses, and the satisfying of any outstanding debts, liens, security interests, legal fees, and similar expenses. The distributor must execute a bill of sale to the purchaser and a general release terminating the distributor's rights under the agreement and releasing any claims against Aunt Millies Bakeries.