For Carvel franchises in Indiana, does the Indiana Addendum limit the geographical extent of the post-term covenant not to compete?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
INDIANA ADDENDUM TO FRANCHISE AGREEMENT
In recognition of the requirements of the Indiana Deceptive Franchise Practices Law, Indiana Code §§ 23-2-2.7-1 through 23-2-2.7-10, and the Indiana Franchise Disclosure Law, Indiana Code §§ 23-2-2-2.5-1 through 23-2-2-2.5-51, the Franchise Agreement, for franchises offered and sold in the State of Indiana or to Indiana residents, is amended to include the following:
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- Section 15.4.B. (Post-Term) of the Franchise Agreement is revised to limit the geographical extent of the post-term covenant not to compete to an area of reasonable size for all franchises sold in the State of Indiana.
INDIANA ADDENDUM TO PERSONAL COVENANTS AGREEMENT
Notwithstanding anything to the contrary stated in the Personal Covenants Agreement, the following provisions will supersede and apply:
- The Personal Covenants Agreement is revised to limit the geographical extent of the covenant not to compete to an area of reasonable size for all franchises sold in the State of Indiana.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, the Indiana Addendum to the Franchise Agreement does address and limit the geographical scope of the post-term covenant not to compete for franchises sold in Indiana. Specifically, Section 15.4.B of the Franchise Agreement, regarding post-term restrictive covenants, is revised to ensure that the geographical extent of the non-compete is reasonable. This means that after the franchise agreement ends, the franchisee will only be restricted from operating a competing business within a limited and reasonable area.
Additionally, the Indiana Addendum to the Personal Covenants Agreement also includes a revision to limit the geographical extent of the covenant not to compete to a reasonable size for franchises sold in Indiana. This suggests that individuals with an equity interest in the franchisee are also subject to a geographically limited non-compete agreement.
This limitation is important for prospective Carvel franchisees in Indiana because it prevents Carvel from imposing an overly broad restriction that could unduly limit their ability to work in the same industry after the franchise agreement terminates. The definition of what constitutes a "reasonable size" is not provided, so a prospective franchisee should seek clarification from Carvel regarding specific distances or areas that would be considered reasonable under this clause. This information is crucial for understanding the practical limitations on future business activities after leaving the Carvel system.