Does the definition of Net Sales for a Carvel franchise include revenue from gambling machines within the Franchised Business?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
d prior to opening the Franchised Business.
3.2 Ongoing Fees.
- A. Royalty Fee. You must pay to us a recurring, non-refundable royalty fee in the amount and at the times specified in Schedule A (the "Royalty Fee"). Concurrent with these payments, you must submit to us any reports or statements required under Section 14.3 (Systems and Reports).
- B. Advertising Contribution. You must pay to us a recurring, non-refundable advertising contribution in the amount and at the times specified in Schedule A (the "Advertising Contribution"). The Advertising Contribution will be in addition to, and exclusive of, your Grand Opening Obligation as specified in Section 10.1.C. (Grand Opening Advertising) and your Local Marketing Obligation as specified in Section 10.1.E. (Local Marketing Obligation), if any.
- C. Net Sales. "Net Sales" means all revenues generated by your Franchised Business or conducted from or with respect to the Franchised Business, whethe
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, the definition of "Net Sales" includes revenues from gambling machines within the Franchised Business, provided that such activities are approved by Carvel. "Net Sales" encompasses all revenues generated by the franchise, regardless of whether the sales are in cash, credit, or other forms of exchange. This broad definition extends to the sale of approved products and services performed at the Franchised Business.
Specifically, the definition of Net Sales includes monies or credit received from on-premises services such as games, gambling machines, or third-party advertising within the Franchised Business. However, the FDD clearly states that this inclusion does not automatically grant approval for such activities. Franchisees must obtain explicit approval from Carvel before offering these services.
This means that if a Carvel franchisee wishes to install and operate gambling machines, the revenue generated from those machines would be included in the calculation of Net Sales, which is used to determine royalty fees and advertising contributions. However, the franchisee must first seek and receive approval from Carvel to offer such services. This requirement allows Carvel to maintain control over the types of activities conducted at its franchise locations and ensure they align with the brand's image and standards.