Can Carvel designate itself or its affiliates as the single source from which franchisees must purchase Goods?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
se items. The availability and terms of financing will depend on factors like the availability of financing generally, your credit worthiness, collateral you pledge, policies of your lending institution, and economic conditions in your area.
ITEM 8
RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES
Required Purchases. We have the right to require that Approved Products, other products, Proprietary Ingredients, supplies (including chemicals), furniture, fixtures, equipment, and services (collectively, "Goods") that you purchase for resale or purchase or lease for use in your Shoppe: (i) meet specifications that we establish from time to time; (ii) be a specific brand, kind, or model; (iii) be purchased or leased only from Approved Suppliers; (iv) be purchased or leased only from a single source that we designate (which may include us or our affiliates or a buying cooperative organized by us or our affiliates); and/or (v) be purchased as part of a purchasing program, arrangement, or contract that we negotiate or specify. We may add or change Approved Suppliers at any time.
You must purchase all of your requirements of Proprietary Ingredients, Proprietary Products, and proprietary uniforms, signs, menu boards, smallwares, materials, supplies, paper goods, equipment, and packaging (collectively, the "Proprietary Goods") from us, our affiliates, or our designated Approved Suppliers. The Proprietary Goods include printed paper, paper products, and plastic products bearing our Proprietary Marks (including, for example, dishes, containers, cartons, bags, napkins, and packaging supplies). We may require you to purchase certain trademarked product lines consisting of t-shirts, apparel, mugs and other merchandise and products bearing the Proprietary Marks ("Trademarked Product Lines") from us, our affiliates, or our designated Approved Suppliers. In addition, if we conduct test marketing to determine consumer trends and the salability of new food or non-food products and services, you may be required to purchase a reasonable quantity of test products we specify from designated Approved Suppliers.
For any proposed site, we may require you to obtain a site selection analysis from an Approved Supplier, which may include an analysis of such factors as traffic patterns, demographics and competitors within the market. As you design and construct your Shoppe, you must hire an architect that we accept in writing to prepare your plans and make any necessary changes to our standard layout and specifications.
Source: Item 8 — Restrictions on Sources of Products and Services (FDD pages 52–56)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, Carvel has the right to designate itself or its affiliates as the sole source from which franchisees must purchase goods. These goods include approved products, other products, proprietary ingredients, supplies (including chemicals), furniture, fixtures, equipment, and services, which are collectively referred to as "Goods." Carvel can mandate that these goods meet specific standards, be of a particular brand, kind, or model, and be purchased or leased exclusively from approved suppliers or a single designated source, which may include Carvel or its affiliates. These stipulations are part of a broader purchasing program or contract that Carvel negotiates or specifies. Carvel also retains the authority to add or change approved suppliers at any time.
Carvel requires franchisees to purchase all proprietary goods, such as proprietary ingredients, products, uniforms, signs, menu boards, smallwares, materials, supplies, paper goods, equipment, and packaging, from Carvel, its affiliates, or designated approved suppliers. This includes printed paper, paper products, and plastic products bearing Carvel's proprietary marks. Carvel may also require franchisees to purchase trademarked product lines, such as t-shirts, apparel, mugs, and other merchandise bearing the proprietary marks, from these same sources. Additionally, franchisees may be required to purchase test products from designated approved suppliers if Carvel conducts test marketing for new food or non-food items.
Currently, neither Carvel nor its affiliates are approved suppliers for any goods that franchisees are required to purchase or lease, with some exceptions. However, GoTo Supply provides supply chain, quality assurance, distribution, and logistics services, while GoTo Rewards manages the gift card program, though neither are approved suppliers for any goods. Carvel and its affiliates reserve the right to become an approved supplier or the only approved supplier for any goods in the future. This means that while franchisees may currently have some flexibility in sourcing certain goods, Carvel retains the right to restrict these sources in the future, potentially impacting franchisees' costs and operational logistics.