What is the purpose of the ACF Promissory Note for Bimbo Foods Bakeries Distribution?
Bimbo_Foods_Bakeries_Distribution Franchise · 2025 FDDAnswer from 2025 FDD Document
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- (1) References to agreements and sections (e.g., Promissory Note, Section 1) relate to ACF Financing Documents, which are included in Exhibit B of this Franchise Disclosure Document)
- (2) May include the initial franchise fee, inventory purchases, and related startup costs. The terms of the loan are summarized in this Item 10.
- (3) Franchisor and its affiliates have made arrangements with Advantafirst Capital Financial Services, Inc. ("ACF") to enable qualifying franchisees to finance a portion of their franchise fee and certain other costs. ACF is a subsidiary of Bimbo Bakeries Inc., a U.S. subsidiary of Grupo Bimbo.
- (4) At closing, you will be required to pay a $500 documentation fee if you do not currently own any Distribution Rights. In addition, you will be responsible for a bank origination fee of .5% (.005) of the loan amount. Existing franchisees who are purchasing rights to Outlets to add to their current Distribution Rights will be responsible for a $250 documentation fee (in lieu of the $500) and no bank origination fee. The documentation fee and the origination fee may be financed.
- (5) ACF's interest rate as of January 1, 2025 for individuals with strong credit is 9.75%, for individuals with less than strong credit is 10.75%, and for equipment-only purchases is 11%. ACF's rates are subject to change without notice.
- (6) You will be responsible for paying this payment to Franchisor on a weekly basis. We will remit such payment on your behalf to the lender on a monthly basis.
- (7) The loan may be prepaid with no penalty.
Source: Item 22 — CONTRACTS (FDD page 84)
What This Means (2025 FDD)
According to Bimbo Foods Bakeries Distribution's 2025 Franchise Disclosure Document, the ACF Promissory Note is related to financing offered through Advantafirst Capital Financial Services, Inc. (ACF), a subsidiary of Bimbo Bakeries Inc. This financing enables qualifying franchisees to fund a portion of their initial franchise fee and certain startup costs, such as inventory purchases. The promissory note outlines the terms of the loan provided by ACF.
The promissory note represents the borrower's (franchisee's) obligation to repay the loan, including the principal amount and interest. The interest rate as of January 1, 2025, is 9.75% for individuals with strong credit, 10.75% for those with less than strong credit, and 11% for equipment-only purchases. These rates are subject to change without notice. The loan may be prepaid without penalty, but prepayments exceeding $5,000 or 25% of the outstanding balance will incur a $350 administration fee for reamortization.
The note is secured by a security interest in the franchisee's assets, including rights under the distribution agreement with Bimbo Foods Bakeries Distribution, handheld computer devices, accounts receivable, equipment, inventory, customer lists, and proceeds from these assets. This means that if the franchisee defaults on the loan, ACF has the right to seize these assets to recover the outstanding debt. The franchisee's obligations under the promissory note include the principal, interest, and all covenants and agreements outlined in the financing agreement.
In essence, the ACF Promissory Note formalizes the debt obligation of the franchisee to ACF, detailing the repayment terms, interest rates, and security interests. It is a critical document for franchisees who choose to finance their franchise investment through ACF, outlining their financial responsibilities and the potential consequences of default.