Where must arbitration or lawsuits take place for Carvel franchise disputes, and is this subject to state law?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provisions | Agreement | Summary |
|---|---|---|
| g. You and your guarantors and owners must sign a general release and remain liable for pre-Transfer obligations | ||
| HES: 20.Q. | If you operate a Hosted Express Shoppe, you must also transfer the Host Facility with your transfer under the Franchise Agreement. | |
| n. Our right of first | FA: 16.8 | We can match any offer for your Shoppe or |
| refusal to acquire your | substantially all interest in your entity. | |
| business | HES: 20.Q. | Above not applicable for a Hosted Express Shoppe. |
| o. Our option to | FA: 18.4 | We may purchase your Goods related to the Shoppe |
| purchase your business | at the fair market value (exclusive of goodwill) and may purchase your Accepted Location if you own it or your interest in any lease. | |
| HES: 20.V. | Above not applicable for a Hosted Express Shoppe. | |
| p. Your death or | FA: 16.6 | Upon 180 days from your death or permanent |
| disability | incapacity you must transfer all rights and interests to buyer that complies with Transfer provisions, except no Transfer Fee will be due. | |
| q. Non-competition | FA: 15.4 | Subject to state law, no involvement in a competitive |
| covenants during the | business (generally, similar types of businesses that | |
| term of the franchise | offer products the same or similar to the Approved Products) anywhere. You may not divert or attempt to divert any business or potential business, misuse vendor relationships, or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Proprietary Marks and the System. | |
| r. | FA: 15.4.B. | Subject to state law, for 12 months after expiration or |
| Non-competition | ||
| covenants after the | termination, no involvement in a competitive business | |
| franchise is terminated or | at the Accepted Location, within 3 miles of your | |
| expires | Accepted Location, or within 3 miles of any Shoppe; and no diverting or attempting to divert any business from any Shoppe. | |
| s. | FA: 8.3, 22.2 | No oral modifications, but we can change the |
| Modification of the | ||
| agreement | and 22.3 | Manuals. |
| t. | FA: 22.2 | Only the terms of the Franchise Agreement and |
| Integration/merger | ||
| clause | related agreements are binding (subject to state law). Any representations or promises outside of the Disclosure Document and Franchise Agreement may not be enforceable. | |
| u. Dispute resolution by | FA: 19.1 | Most disputes must be resolved by arbitration. |
| arbitration or mediation | ||
| v. | FA: 19.1 | Subject to state law, currently, arbitration or lawsuit |
| Choice of forum | must be in the metropolitan area of district court where our principal place of business is located (currently, Georgia). |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 84–91)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, dispute resolution through arbitration or lawsuits is subject to state law. The FDD specifies that any arbitration or lawsuit must occur within the metropolitan area of the district court where Carvel's principal place of business is located, which is currently in Georgia. This means that franchisees may be required to travel to Georgia to resolve disputes with Carvel.
This requirement can have significant implications for franchisees, particularly those located far from Georgia. It could increase the cost of resolving disputes due to travel expenses, legal fees for engaging counsel in Georgia, and the inconvenience of being away from their business and home. Franchisees should consider these potential costs when evaluating the Carvel franchise opportunity.
It is important to note that the specific venue for dispute resolution is subject to state law, which means that certain state franchise laws may override or modify this provision. Prospective franchisees should consult with an attorney to understand how their state's laws may affect the enforceability of the forum selection clause. Understanding these legal nuances is crucial for making an informed decision about investing in a Carvel franchise.