Does the UCC-1 form for Aunt Millies Bakeries cover all assets of the franchise?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
request, agrees to participate in such promotion or discount price, AUNT MILLIE'S will contribute to the promotion or discount in accordance with its Promotion Participation Policy as amended from time to time.
- §3.7 SECURITY INTEREST: To secure the payment of any indebtedness or liability of DISTRIBUTOR to AUNT MILLIE'S, now or hereafter arising, pursuant to this Agreement or otherwise, DISTRIBUTOR hereby grants and conveys to AUNT MILLIE'S a continuing and general security interest in the Distribution Rights, all other assets used in connection with the exercise and operation of the Distribution Rights, all rights hereunder and all Products and receivables of the DISTRIBUTOR, and grants to AUNT MILLIE'S the rights of a secured party. DISTRIBUTOR agrees to execute the AUNT MILLIE'S Security Agreement and financing statement(s) to evidence such security interest. Any default under the AUNT MILLIE'S Security Agreement by DISTRIBUTOR shall be a default under this Agreement.
- §3.8 DEFAULT: Nothing herein shall be deemed to require AUNT MILLIE'S to fill an order of DISTRIBUTOR during any time when DISTRIBUTOR is in default of any payment or other obligation to AUNT MILLIE'S.
ARTICLE 4 DISTRIBUTOR'S OBLIGATIONS
§4.1 RESULTS: DISTRIBUTOR agrees to use its best efforts to develop and maximize sales of Products to Outlets within the Sales Area, by maintaining an adequate and fresh supply of Products in all Outlets;
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries' 2025 Franchise Disclosure Document, the franchisor takes a security interest in various assets of the distributor to secure any indebtedness or liability. Specifically, Aunt Millies Bakeries is granted a security interest in the Distribution Rights, all other assets used in connection with the exercise and operation of the Distribution Rights, all rights under the Distribution Agreement, and all Products and receivables of the Distributor.
The FDD indicates that the distributor must execute Aunt Millie's Bakeries Security Agreement and financing statements, including a UCC-1 form, to evidence this security interest. The UCC-1 form serves as a public notice of the lender's claim to certain assets of the debtor.
While the FDD mentions the UCC-1 form, it does not explicitly state that the UCC-1 form covers all assets of the franchise. Instead, it specifies categories of assets in which Aunt Millies Bakeries takes a security interest. A prospective franchisee should carefully review the Aunt Millies Bakeries Security Agreement and the UCC-1 form itself to understand the full scope of the assets covered and the implications for their business.