From what do Carvel's foreign income taxes arise?

According to Carvel's 2025 Franchise Disclosure Document, the company's foreign income taxes stem from withholding taxes. These taxes are specifically associated with payments of royalties and fees made by Carvel's international franchisees. This means that when international franchisees pay royalties and fees to Carvel, the foreign jurisdictions may impose a withholding tax on those payments.

For a prospective Carvel franchisee considering international expansion or operation, this information is relevant because it highlights that Carvel's income tax expenses include foreign income taxes. These taxes are directly linked to the financial transactions between Carvel and its international franchisees. Understanding this aspect of Carvel's tax structure can help potential franchisees appreciate the financial implications of international franchising activities.

It is important to note that the specific rates and regulations governing these withholding taxes can vary significantly depending on the international jurisdiction in question. Therefore, Carvel must comply with the tax laws of each country where it has franchisees. This compliance ensures that Carvel meets its tax obligations and avoids potential penalties or legal issues related to international financial transactions.