What is the cure period for a Carvel franchisee to obtain the signing of Personal Covenants?

According to Carvel's 2025 Franchise Disclosure Document, a franchisee has 10 calendar days to cure a default related to obtaining the signing of required Personal Covenants after receiving a notice of default from Carvel. This means that if the franchisee fails to ensure that all individuals with equity interest in the franchise sign the Personal Covenants, Carvel will send a notice, and the franchisee then has 10 calendar days to rectify the situation.

Personal Covenants are agreements that individuals with equity interest in the franchisee entity must sign, binding them to certain obligations, particularly those related to confidentiality and restrictive covenants outlined in Section 15 of the Franchise Agreement. These covenants ensure that these individuals are personally liable for upholding the confidentiality and non-compete terms, as if they were directly a party to the Franchise Agreement.

The requirement for Personal Covenants is a mechanism for Carvel to protect its interests by ensuring that all individuals who benefit from the franchise are bound by the key obligations of the Franchise Agreement. This is especially important for protecting Carvel's confidential information and preventing unfair competition. The relatively short cure period of 10 days underscores the importance Carvel places on these covenants being in place and enforced promptly.

If the franchisee fails to obtain the necessary signatures within the 10-day cure period, Carvel may have grounds to take further action, potentially including termination of the Franchise Agreement, depending on the specific terms outlined in the agreement. Therefore, it is crucial for prospective Carvel franchisees to understand the Personal Covenant requirements and ensure timely compliance to avoid potential defaults and penalties.