Can the Secured Party appoint a receiver for the Aunt Millies Bakeries Collateral, and if so, how?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) Secured Party may by instrument in writing appoint any person as a receiver of all or any part of the Collateral. Secured Party may from time to time remove or replace a receiver, or make application to any court of competent jurisdiction for the appointment of a receiver. Any receiver appointed by Secured Party will (for purposes relating to responsibility for the receiver's acts or omissions) be considered to be the Distributor's agent. Secured Party may from time to time fix the receiver's remuneration and the Distributor will pay Secured Party the amount of such remuneration. Secured Party will not be liable to the Distributor or any other person
in connection with appointing or not appointing a receiver or in connection with the receiver's actions or omissions.
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to the 2025 Aunt Millies Bakeries FDD, the Secured Party has the right to appoint a receiver for the collateral under certain conditions. Specifically, upon any default by the Distributor (franchisee), the Secured Party can appoint any person as a receiver of all or any part of the collateral by providing a written instrument. The Secured Party also has the power to remove or replace a receiver or apply to a court of competent jurisdiction for the appointment of a receiver.
The appointed receiver is considered the Distributor's agent for responsibility purposes related to their actions or omissions. The Secured Party can determine the receiver's remuneration, which the Distributor is then obligated to pay. Importantly, the Secured Party is not liable to the Distributor or any other person for appointing or not appointing a receiver, nor are they liable for the receiver's actions or omissions.
The Secured Party or the receiver has extensive powers, including taking possession of the collateral, receiving rents and profits, carrying on the Distributor's business, borrowing against the collateral, repairing the collateral, processing it for sale, and selling or leasing the collateral under terms they deem appropriate. They can also enter any place of business without charge, excluding all other persons, including the Distributor. These provisions grant significant control to the Secured Party in the event of a default, allowing them to manage and dispose of the collateral to recover outstanding obligations.