What accounting systems and procedures must a Carvel franchisee comply with?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
- 8.3 Changes to the System and the Manuals. We may make additions to, deletions from, and modifications to the Manuals ("Supplements"), Standards, or System from time to time in any form or fashion, including (i) altering the Approved Products, accounting and technology systems, forms, policies, and procedures of the System; (ii) adding, modifying, or substituting the
12.8 Computer System.
A. Acquisition and Operation. You must promptly purchase, lease and/or license and install at the Franchised Business, at your sole expense, the computerized point-of-sale system, computer and technology systems, mobile hardware, software, applications, associated computer hardware, telephone lines, network connections, communications equipment, high speed internet access (e.g. fiber or cable), and other equipment that we require from time to time (the "Computer System"), all of which you must keep in good maintenance and repair. You must use the Computer System in accordance with our Standards. We have the right to retrieve all data from your Computer System that we deem appropriate, and we may require you to obtain, at your expense, polling services we specify from a supplier that we specify (which may be us or our affiliates). If it becomes advisable at any time, in our sole discretion, for us to change, upgrade, or discontinue use of any of the components of the Computer System, you will comply with our directions, at your expense, within a reasonable time after notice to you. We will have no liability or obligation whatsoever with respect to our requirement that you modify or discontinue use of any of the components of the Computer System or any unauthorized modifications to the Computer System that you make.
12.9 Customer Card Programs.
At your expense, you must fully participate in gift card programs, loyalty programs, credit card and other payment programs, customer tracking programs, incentive programs, reward programs, and other types of programs ("Customer Card Programs") that we develop or designate to support and promote the System.
You must comply with all our procedures and policies for Customer Card Programs in the Manuals.
You will, at your sole expense, promptly install at the Franchised Business any acceptance system for Customer Card Programs and/or hardware and software necessary for Customer Card Programs to operate with the Computer System.
Any fees that we or our affiliates charge you related to Customer Card Programs will not exceed 110% of our or our affiliates' actual costs and expenses related to such products or services.
- 3.6 Late Reporting Fee.
If you fail to submit timely, complete, and accurate reports, financial statements, tax returns, and statements of initial investment costs in accordance with Sections 14.3 (Systems and Reports), 14.4 (Financial Statements), 14.5 (Tax Returns), and 14.7 (Initial Investment Statements), we may charge you our then-current late fee (the "Late Reporting Fee").
The Late Reporting Fee is currently $50 per week that such report, statement, or return is late.
We may increase the Late Reporting Fee in any calendar year by no more than the Allowed Adjustment.
If you fail to report the Net Sales of the Franchised Business to us for any reporting period as required in this Agreement, we have the right to make bank transfers or drafts for Royalty Fees and Advertising Contributions based on our reasonable estimate of the amounts for the Franchised Business and/or the data of the point-of-sale system and other equipment provided for in Section 12.8.
- 3.5 Interest.
You must pay us interest on amounts not paid on time at the rate of 1.5% per month or portion of a month, but not more than the maximum interest rate permitted by applicable laws.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to the 2025 Carvel FDD, franchisees must adhere to specific accounting systems and procedures as part of the overall franchise system. Carvel may modify the accounting systems that franchisees are required to use. Franchisees are obligated to purchase, lease, and install a computerized point-of-sale (POS) system, along with other computer and technology systems, and maintain them in good repair. Carvel has the right to access data from the franchisee's computer system and may require franchisees to use specified polling services at their own expense.
Carvel franchisees must participate in Customer Card Programs, which include gift card, loyalty, and reward programs, and comply with all related procedures and policies outlined in the Manuals. Franchisees are responsible for installing any necessary acceptance systems, hardware, and software for these programs to operate with the Computer System, and must also cover all associated fees charged by Carvel, its affiliates, or approved suppliers. These fees will not exceed 110% of the actual costs incurred by Carvel or its affiliates.
Franchisees must submit timely, complete, and accurate reports, financial statements, and tax returns. Failure to do so may result in a late reporting fee, which is currently $50 per week for each late report, statement, or return. Carvel reserves the right to increase this fee annually, but not by more than the Allowed Adjustment. Carvel can also make bank drafts for Royalty Fees and Advertising Contributions based on their reasonable estimate if a franchisee fails to report Net Sales, utilizing data from the point-of-sale system or other equipment. Interest will be charged on overdue amounts at a rate of 1.5% per month, or the maximum rate permitted by law.
These requirements ensure that Carvel franchisees maintain consistent and accurate financial reporting, which is crucial for the franchisor to monitor performance, calculate royalties, and maintain brand standards across all locations. Franchisees should be prepared to invest in the required technology and systems, as well as allocate resources for compliance with reporting deadlines and procedures.