What rights under the franchise are secured by Aunt Millies Bakeries financing?

According to Aunt Millies Bakeries's 2025 Franchise Disclosure Document, both First Capital Acceptance Corp. (FCAC) and Distribution Services of America, Inc. (DSA) secure their financing with rights under the franchise agreement. For financing obtained through First Capital, up to 90% of the franchise fee can be financed. The security includes rights under the franchise as specified in the Distribution Agreement §3.7, Financing Security Agreement §1, and Form UCC-1 Financing Statement. Additionally, all accounts, accounts receivable, contract rights, and chattel paper relating to the franchise are included, as detailed in the Financing Security Agreement §1 and Form UCC-1 Financing Statement. The security also extends to all equipment, inventory, goods, property, and general intangibles related to the franchise, whether existing or acquired in the future, along with any accessions, replacements, and additions, and all cash or non-cash proceeds, including insurance proceeds, of the collateral.

For financing obtained through DSA, which covers 10% of the initial franchise fee, the security also includes rights under the franchise, as outlined in the DSA Financing Security Agreement §1 and Form UCC-1 Financing Statement. The security encompasses all equipment, inventory, accounts receivable, goods, property, contract rights, chattel paper, and general intangibles relating to the franchise, as specified in the DSA Financing Security Agreement §1 and Form UCC-1 Financing Statement. This extends to any and all accessions, replacements, and additions, as well as all cash or non-cash proceeds of the foregoing, as detailed in the DSA Financing Security Agreement §1 and Form UCC-1 Financing Statement.

This means that if an Aunt Millies Bakeries franchisee defaults on their loan with either First Capital or DSA, the lender has a legal claim to the franchisee's rights and assets associated with the franchise. This could include the franchisee's distribution rights, accounts receivable, equipment, and inventory. Prospective franchisees should carefully review the Distribution Agreement, Financing Security Agreement, and Form UCC-1 Financing Statement to fully understand the extent of the security interest granted to the lender. Understanding these security interests is crucial for assessing the risks associated with financing the franchise fee and the potential consequences of default.