For a Carvel franchise operated by an Entity, what must the governing documents provide regarding the transfer of ownership interest during the term?

According to Carvel's 2025 Franchise Disclosure Document, if a franchisee is an Entity, its governing documents must state that no transfer of any ownership interest can occur except as outlined in Section 16 (Transfer) of the Franchise Agreement. This restriction applies throughout the entire term of the agreement.

This requirement ensures that Carvel maintains control over who becomes an owner in their franchise system. By restricting transfers except as explicitly allowed in Section 16, Carvel aims to ensure that all new owners meet their qualifications and standards. This protects the brand's reputation and consistency across all franchise locations.

Furthermore, any securities issued by the Entity must have a clearly visible printed statement indicating this transfer restriction. This is likely intended to inform potential investors or shareholders of the Entity about the limitations on transferring ownership, ensuring transparency and preventing misunderstandings. Prospective Carvel franchisees should carefully review Section 16 of the Franchise Agreement to fully understand the conditions and limitations on ownership transfers.