In the context of Carvel, what is a Control Transfer?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
16.1 Definition of Transfer. For purposes of this Agreement, "Transfer" as a verb means to sell, assign, give away, transfer, pledge, mortgage, or encumber, either voluntarily or by operation of law (such as through divorce or bankruptcy proceedings), any interest in this Agreement, the Franchised Business, substantially all the assets of the Franchised Business, or in the ownership of the franchisee (if you are an Entity). "Transfer" as a noun means any such sale, assignment, gift, transfer, pledge, mortgage, or encumbrance. A "Control Transfer" means any Transfer of (i) this Agreement or any interest in this Agreement; (ii) the Franchised Business or all or substantially all of the Franchised Business's assets; or (iii) any Controlling Interest (defined below) in you (if you are an Entity), whether directly or indirectly through a transfer of legal or beneficial ownership interests in any Owner that is an Entity, and whether in one transaction or a series of related transactions, regardless of the time period over which these transactions take place. References to a "Controlling Interest" in you mean either (i) 20% or more of the direct or indirect legal or beneficial ownership interests in your Entity or (ii) the acquisition of an ownership interest or other right or interest which grants the power (whether directly or indirectly) to direct or
cause the direction of management and polices of you or the Franchised Business to any individual or Entity, or group of individuals or Entities, that did not have that power before that acquisition.
- 16.2 No Transfer Without Our Consent.
This Agreement and the license are personal to you, and we have granted the license in reliance on your (and, if you are an Entity, your Owners') business skill, financial capacity, and personal character.
Accordingly, neither you nor any of the Owners or any successors to any part of your interest in this Agreement or the license may make any Transfer or permit any Transfer to occur without obtaining our prior written consent.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, a Control Transfer involves transferring significant control over the franchise. Specifically, it means transferring the franchise agreement itself, the Franchised Business, or a Controlling Interest in the franchisee entity.
A Controlling Interest is defined as owning 20% or more of the direct or indirect legal or beneficial ownership interests in the franchisee entity. It also includes acquiring an ownership interest or other right that grants the power to direct the management and policies of the franchisee or the Franchised Business. This applies whether the transfer occurs in a single transaction or a series of related transactions over time.
Carvel requires franchisees to obtain prior written consent for any Transfer, including a Control Transfer. To get this consent, franchisees must provide written notice and all requested information. For a Control Transfer, the franchisee must notify Carvel at least 90 days before the proposed transfer and provide all necessary information at least 60 days prior. Carvel has the sole and absolute discretion to withhold consent for a proposed Control Transfer.