Under what conditions can an Aunt Millies Bakeries borrower grant security interests?

According to the 2025 Aunt Millies Bakeries FDD, a borrower, typically a franchisee, is generally restricted from creating liens or granting security interests against their property. However, there is an exception: an Aunt Millies Bakeries borrower may execute general liens and grant security interests to and in favor of Perfection Bakeries, Inc., Distribution Services of America, Inc., and B&G Leasing, Inc. for obligations other than those created under the Financing Security Agreement.

This means that while franchisees are prevented from encumbering their assets with liens or security interests for most debts, they are permitted to do so specifically for obligations to Perfection Bakeries, Distribution Services of America, and B&G Leasing, provided these obligations are separate from those established in the Financing Security Agreement itself. This exception likely facilitates the franchisee's ability to obtain necessary supplies, services, or equipment from these affiliated entities.

This clause protects Aunt Millie's Bakeries' interests by preventing franchisees from taking on additional debt that could jeopardize their ability to meet their obligations to the company. However, it also provides some flexibility for franchisees to manage their business relationships with key suppliers and service providers within the Aunt Millie's Bakeries network. Prospective franchisees should carefully evaluate the implications of this clause and understand the potential impact on their ability to secure financing or manage their assets.