Is the Secured Party liable for appointing or not appointing a receiver in the Aunt Millies Bakeries agreement?
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 Aunt Millies Bakeries' 2025 Franchise Disclosure Document, the Secured Party, which in this case is Aunt Millie's Bakeries, is not liable to the Distributor or any other person for actions related to appointing or not appointing a receiver. This means that Aunt Millie's Bakeries can appoint a receiver to manage the collateral (assets) securing the distributor's obligations without incurring liability for that decision. Additionally, Aunt Millie's is not liable for the receiver's actions or omissions.
This provision protects Aunt Millie's Bakeries from potential lawsuits or claims arising from the appointment of a receiver or the receiver's conduct. A receiver is appointed to manage the assets of a defaulting distributor, and this clause ensures that Aunt Millie's Bakeries is not held responsible for any mismanagement or other issues that may arise during the receivership. The receiver is considered the distributor's agent, shifting the responsibility for the receiver's actions to the distributor.
For a prospective Aunt Millies Bakeries distributor, this clause highlights the importance of fulfilling their obligations under the agreement to avoid default and the potential appointment of a receiver. It also means that if a receiver is appointed, the distributor cannot hold Aunt Millie's Bakeries liable for any damages or losses resulting from the receiver's actions. This underscores the need for distributors to carefully consider the risks associated with the agreement and to seek legal counsel if they have any concerns about their potential liability.