Does the UCC-1 form for Aunt Millies Bakeries require the franchisee's signature?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
- §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.
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to the 2025 FDD, Aunt Millies Bakeries requires the distributor to grant them a security interest in various assets to secure any debts or liabilities. Specifically, the distributor grants Aunt Millie's a continuing 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.
To formalize this security interest, the distributor must execute Aunt Millie's Security Agreement and financing statements. The FDD states that any default under the Aunt Millie's Security Agreement by the distributor constitutes a default under the Distribution Agreement itself.
In simpler terms, this means that as a franchisee, you are pledging your business assets as collateral to Aunt Millie's Bakeries. If you fail to meet your financial obligations to Aunt Millie's, they have the legal right to seize those assets. The requirement to sign the Security Agreement and financing statements (UCC-1) legally binds you to these terms, making it a critical step in establishing the security interest. Therefore, the UCC-1 form does require the franchisee's signature.