What rights does the Secured Party have before and after default in the Aunt Millies Bakeries agreement?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
f) to maintain the collateral in good repair and working condition.
4. DEFAULT:
The following shall constitute a default by the Borrower:
- a) Borrower's failure to pay to Secured Party when due any obligation secured by this Agreement;
- b) any termination of the Distributor's Agreement executed between Borrower and PERFECTION BAKERIES, INC., d/b/a AUNT MILLIE'S of even date herewith;
- c) Borrower's failure to comply with or perform any provisions or covenants of this Agreement or any other agreement between Borrower and Secured Party;
- d) Borrower's failure to maintain the insurance required in Article 3 above;
- e) Borrower's failure to submit current financial statements and tax returns as required in Article 3 above;
- f) any reduction in the value of the collateral, due to the fault of the Borrower, which imperils satisfaction of Borrower's obligations hereunder;
- g) Any action or failure to act of Borrower which, in the reasonable judgment of the Secured Party, adversely affects the collateral or the ability to satisfy any of Borrower's obligations hereunder
- h) the making of any seizure, sale, assignment, lease, pledge or other transfer of any collateral, except as otherwise permitted under this Agreement;
- i) a notice of lien, levy, attachment or assessment is filed or recorded with respect to any collateral, and the claim is not fully discharged and satisfied within 30 days of such filing or recordation;
- j) with respect to Borrower or a guarantor of Borrower's obligations hereunder: dissolution, insolvency, inability to pay debts as they mature, appointment of a receiver for any part of its/his/her property, assignment for the benefit of creditors, the commencement of any proceeding under any bankruptcy or insolvency laws, or other material adverse change in financial condition or means or ability to pay.
5. REMEDIES:
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
Based on the 2025 Aunt Millies Bakeries Franchise Disclosure Document, the secured party has specific rights both before and after a default occurs. Before a default, the borrower is obligated to maintain the collateral in good repair and working condition.
Several conditions constitute a default by the borrower. These include failure to pay obligations when due, termination of the Distributor's Agreement with Perfection Bakeries, failure to comply with any agreement provisions, failure to maintain required insurance, failure to submit financial statements and tax returns, any reduction in collateral value due to the borrower's fault, any action adversely affecting the collateral, unauthorized transfer of collateral, or the filing of a lien against the collateral that remains undischarged for 30 days. Additionally, events such as dissolution, insolvency, or bankruptcy proceedings involving the borrower or a guarantor also constitute default.
Upon default, the secured party has remedies available. The document specifies that to secure the payment of any indebtedness or liability of the distributor to Aunt Millies Bakeries, the distributor grants Aunt Millies a continuing 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. Any default under the AUNT MILLIE'S Security Agreement by DISTRIBUTOR shall be a default under this Agreement.
Furthermore, Aunt Millies Bakeries is not required to fill an order of DISTRIBUTOR during any time when DISTRIBUTOR is in default of any payment or other obligation to AUNT MILLIE'S. If the breach involves criminal activity, threatens public health or safety, constitutes an abandonment of any portion the Sales Area, or threatens to do significant harm to AUNT MILLIE'S, its trademarks or commercial reputation, AUNT MILLIE'S may terminate this Agreement immediately upon written notice and DISTRIBUTOR shall have no right to cure. Termination shall require DISTRIBUTOR to sell the Distribution Rights, and in the event that DISTRIBUTOR has not consummated a sale to a qualified purchaser within 90 days of the date of termination, AUNT MILLIE'S shall be authorized to sell DISTRIBUTOR'S Distribution Rights to such a purchaser at the best price which can be obtained after proper notice and advertisement.