What does Aunt Millies Bakeries secure with the Distributor's assets?

According to Aunt Millies Bakeries' 2025 Franchise Disclosure Document, to secure the payment of any indebtedness or liability of the Distributor to Aunt Millie's, now or hereafter arising, pursuant to the Distribution Agreement or otherwise, the Distributor grants and conveys to Aunt Millie's a continuing and general security interest in several assets. These assets include the Distribution Rights, all other assets used in connection with the exercise and operation of the Distribution Rights, all rights under the agreement, and all Products and receivables of the Distributor.

This security interest grants Aunt Millie's the rights of a secured party, meaning they have a legal claim on these assets if the Distributor fails to meet their financial obligations. The Distributor is required to execute Aunt Millie's Security Agreement and financing statements to formally document this security interest. Any failure to comply with the Aunt Millie's Security Agreement by the Distributor constitutes a default under the Distribution Agreement.

This arrangement is a standard practice in franchising to protect the franchisor's financial interests. It ensures that Aunt Millie's has recourse if the distributor incurs debt or liabilities to the company. Prospective distributors should carefully review the Aunt Millie's Security Agreement to fully understand the implications of granting this security interest and the specific assets that are subject to it.