What actions are considered injurious or prejudicial to the goodwill associated with the Carvel Marks and System?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
(iv) perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System.
B.
Post-Term.
Beginning at the expiration or termination of this Agreement and for 12 months thereafter or 12 months after a court of competent jurisdiction enters an order enforcing this Section 15.4 of this Agreement, whichever occurs last, (i) at the Accepted Location, (ii) within 3 miles of the Accepted Location, and (iii) within 3 miles of any Business, neither you nor any of your Owners, nor any person or Entity controlling, controlled by, or under common control with you or them, will individually or jointly with others, directly or indirectly, by, through, on behalf of, or in conjunction with, any person or Entity: (a) own, manage, engage in, be employed by, advise, make loans to, participate in, consult for, or have any other interest in a Competitive Business or (b) divert or attempt to divert any business from any Business.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, franchisees must not perform any action that could harm the goodwill associated with the Carvel Marks and System. This obligation extends beyond simply running the franchise; it also covers the franchisee's and their owners' actions, both during the franchise term and for a period after the agreement expires or is terminated.
Specifically, during the term of the agreement, franchisees (or their owners) cannot own, manage, or participate in any business deriving more than 20% of its revenue from products competing with Carvel's approved products. They are also prohibited from engaging in businesses similar to the Carvel concept, or entities that franchise similar businesses, unless explicitly agreed upon with Carvel. Franchisees must not divert business away from their Carvel franchise or use vendor relationships established through Carvel for unauthorized purposes.
Post-termination, for a period of 12 months after the agreement ends or after a court order enforcing these restrictions, franchisees and their owners are restricted from engaging in competitive businesses within a 3-mile radius of the former Carvel location or any other Carvel Business. This includes owning, managing, or participating in any Competitive Business or diverting business from any Carvel Business. These restrictions aim to protect Carvel's market position and brand reputation by preventing former franchisees from leveraging their knowledge and resources gained during their time with Carvel to compete against the brand.
These covenants are designed to protect Carvel's brand and market position. Prospective franchisees should carefully consider these restrictions, as they could significantly limit their business activities both during and after the franchise agreement. It is important to fully understand the scope of these restrictions and how they might impact future business opportunities.