Does the security interest for Aunt Millies Bakeries include assets acquired after the agreement date?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
- transfers to Secured Party a security interest in and to the following personal property: a) any and all assets and rights that the Borrower may have or acquire under the Distribution Agreement between PERFECTION BAKERIES, INC., and Borrower and the Bill of Sale related thereto;
- b) all accounts, accounts receivable, contract rights and chattel paper related to or arising from Borrower's business, whether now or hereafter existing or acquired;
- c) all equipment, inventory, goods, property, customer lists, and general intangibles related to or arising from Borrower's business, whether now or hereafter existing or acquired and wherever located;
- d) any and all accessions, replacements and additions to or of the foregoing; and
- e) all cash or non-cash proceeds (including insurance proceeds) of the foregoing, the items described in a), b), c), d) and e) above being hereinafter collectively referred to as the "Collateral".
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries' 2025 Franchise Disclosure Document, the security interest granted to Perfection Bakeries, Inc. d/b/a Aunt Millie's includes assets acquired after the agreement date. The security agreement ensures the distributor's obligations to Aunt Millie's are met. This is achieved by granting Aunt Millie's a security interest in various assets related to the distributor's business.
Specifically, the security interest covers all accounts, accounts receivable, contract rights, and chattel paper related to or arising from the distributor's business, regardless of whether these assets exist at the time of the agreement or are acquired later. It also includes all equipment, inventory, goods, property, customer lists, and general intangibles related to the business, irrespective of their location or time of acquisition. This also extends to any accessions, replacements, and additions to the aforementioned assets, as well as any cash or non-cash proceeds derived from them.
This means that Aunt Millie's Bakeries has a claim on both current and future assets of the distributor's business to secure the distributor's financial and contractual obligations. For a prospective franchisee, this implies that any new assets acquired during the term of the agreement, such as new equipment or an expanded customer base, would also be subject to this security interest. This is a common practice in franchising to protect the franchisor's financial interests and ensure compliance with the franchise agreement.