According to the Carvel MUA, when are the initial franchise fees due?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Initial Franchise Fees. You must pay us all of the Initial Franchise Fees under each of the MUA Franchise Agreements in a lump sum upon execution of the MUA Franchise Agreements. We have no obligation to refund any portion of the Initial Franchise Fees to you, even if this Addendum or any of the MUA Franchise Agreements are terminated and/or you fail to develop one or more of the MUA Businesses.
ITEM 5 INITIAL FEES
- Based upon our financial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until we complete our pre-opening obligations under the Franchise Agreement. If a franchisee signs a Multi-Unit Addendum to a Franchise Agreement, all initial fees and payments owed by such franchisee under each of the Franchise Agreements that is subject to the Multi-Unit Addendum shall be deferred until we complete our pre-opening obligations under the applicable Franchise Agreement.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, the initial franchise fees under each MUA (Multi-Unit Addendum) Franchise Agreement are due in a lump sum upon the execution of the MUA Franchise Agreements. This means that a prospective Carvel franchisee must pay the entire initial franchise fee at the time of signing the agreement.
Carvel does not offer refunds on any portion of the initial franchise fees, even if the addendum or any of the MUA Franchise Agreements are terminated, or if the franchisee fails to develop one or more of the MUA Businesses. This policy means that franchisees risk losing their entire initial investment if they cannot fulfill their development obligations or if the agreement is terminated for any reason.
However, there is an exception for franchisees in Maryland. Based upon Carvel's financial condition, the Maryland Securities Commissioner requires a financial assurance. Therefore, all initial fees and payments owed by franchisees in Maryland are deferred until Carvel completes its pre-opening obligations under the Franchise Agreement. If a franchisee signs a Multi-Unit Addendum to a Franchise Agreement in Maryland, all initial fees and payments owed by such franchisee under each of the Franchise Agreements that is subject to the Multi-Unit Addendum shall be deferred until Carvel completes its pre-opening obligations under the applicable Franchise Agreement.