Following a merger or acquisition, is Carvel permitted to allow acquired businesses to continue operating under a different name, even within a Carvel franchisee's Area of Protection?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
Under the Franchise Agreement, we and our affiliates retain all the rights that we do not specifically grant to you. For example, without limitation, we retain the following rights, without providing any rights or compensation to you:
- (i) We and/or our affiliates may establish or license franchises and/or companyowned businesses offering products or services that are similar or identical to the Approved Products using the System or elements of the System under the Proprietary Marks or any other marks anywhere, including at or near your Accepted Location;
- (ii) We and/or our affiliates may produce and/or sell Approved Products or any other products or services, and authorize others to produce and/or sell Approved Products or any other products or services, using the Proprietary Marks, the System, and any other marks and/or systems we desire through any alternative channel of distribution located anywhere, including to and through (a) supermarkets, convenience stores, club stores, and other retail facilities not dedicated to the sale of the Approved Products, (b) mail order and e-commerce channels, and (c) kitchens devoted to the preparation of Products or Approved Products (often referred to as ghost, dark or cloud kitchens), which may use the Marks and may deliver to customers located anywhere;
- (iii) We and/or our affiliates may advertise, or authorize others to advertise, using the Proprietary Marks anywhere; and
- (iv) We and/or our affiliates may acquire, be acquired by, or merge with another entity with existing businesses or franchises that are similar to or competitive with the Shoppes
anywhere and (a) convert the other businesses to be Shoppes operating under the Proprietary Marks and the System, (b) permit the other businesses to continue to operate under another name anywhere, and/or (c) permit the businesses to operate under another name and convert your Shoppe and other existing Shoppes to such other name.
Source: Item 12 — Territory (FDD pages 74–79)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, Carvel retains specific rights regarding acquisitions and mergers, even if a franchisee has an Area of Protection. Carvel and its affiliates have the right to acquire, be acquired by, or merge with another entity that has existing businesses or franchises similar to or competitive with Carvel Shoppes.
Following such a transaction, Carvel has several options. It can convert the acquired businesses into Carvel Shoppes operating under Carvel's Proprietary Marks and System. Alternatively, Carvel can allow these businesses to continue operating under their existing names, regardless of whether they are located inside or outside a Carvel franchisee's Area of Protection. Carvel also has the option to permit the acquired businesses to operate under their existing names while simultaneously converting existing Carvel Shoppes to that other name.
This retained right means that a Carvel franchisee's Area of Protection does not prevent Carvel from allowing an acquired business to operate under a different name within that protected area. This could introduce competition within a franchisee's Area of Protection from a business that is not branded as a Carvel, but still offers similar or competitive products or services. This is a crucial consideration for prospective franchisees as it highlights a potential limitation to the territorial protection offered by Carvel.