For Aunt Millies Bakeries, when does the security interest attach to existing collateral?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
ENT,** made effective ___________, 20___, by and between Distribution Services of America, Inc., a Florida corporation with offices at 2900 Westchester Avenue, Purchase, New York (herein called the "Secured Party") and DISTRIBUTOR'S CORPORATE NAME, residing at DISTRIBUTOR'S ADDRESS, (herein called the "Borrower").
W I T N E S S E T H :
In consideration of the premises and agreements contained herein and other good and valuable consideration, the sufficiency and receipt of which is hereby acknowledged, the parties agree as follows:
- 1. GRANT OF SECURITY INTEREST: To secure the full and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of each of the Obligations (as hereafter defined), the Borrower hereby grants, conveys, assigns and transfers to Secured Party a security interest in and to the following personal property:
- a) any and all rights that the Borrower may have under the Distributor's Agreement between PERFECTION BAKERIES, INC., d/b/a AUNT MILLIE'S and Borrower;
- b) all equipment, inventory, accounts, goods, property, contract rights, chattel paper and general intangibles related to or arising from Borrower's business,
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to the 2025 Aunt Millies Bakeries FDD, the security interest is granted to secure the full payment and performance of obligations when due. The borrower grants a security interest to the secured party in the following personal property: rights under the Distributor's Agreement, all equipment, inventory, accounts, goods, property, contract rights, chattel paper and general intangibles related to the borrower's business, whether now or hereafter existing or acquired and wherever located, any and all accessions, replacements and additions to or of the foregoing, and all cash or non-cash proceeds of the foregoing. This means that Aunt Millies Bakeries has a legal claim on these assets as soon as the agreement is in place, protecting their financial interests.
The obligations secured include the outstanding principal and interest on the Promissory Note, as well as all debts, liabilities, obligations, covenants, and agreements of the borrower contained in the Financing Security Agreement. This comprehensive security interest ensures that Aunt Millies Bakeries has recourse to a wide range of the franchisee's assets if the franchisee fails to meet their financial obligations.
This arrangement is typical in franchising, where franchisors often require security interests to protect their investments and ensure franchisees comply with financial terms. Prospective Aunt Millies Bakeries franchisees should carefully review the Financing Security Agreement to fully understand the scope of the collateral and the implications of default.