For Carvel franchises, what is the maximum 'Allowed Adjustment' that fees can be increased by in any calendar year?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
For any fee that may be increased by no more than the Allowed Adjustment, the "Allowed Adjustment" in any calendar year will not exceed, at our option, (a) 50% of the fee that is in effect at the start of the calendar year or (b) the increase in the actual costs and expenses that we or our affiliates incur to provide such goods or services to you.
Source: Item 6 — OTHER FEES (FDD pages 31–42)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, the 'Allowed Adjustment' for certain fees will not exceed, at Carvel's option, either 50% of the fee in effect at the start of the calendar year, or the increase in actual costs and expenses that Carvel or its affiliates incur to provide such goods or services to the franchisee. This adjustment applies to specific fees outlined in the FDD.
Several fees that Carvel charges are subject to this 'Allowed Adjustment' limit. These include the Learning Management System License Fee (currently $170 per year), the Sublease Administration Fee (currently $200 per month), the Lease Renewal/Extension Review Fee (currently ranging from $500 to $2,000), the Late Reporting Fee (currently $50 per week), the Subsequent Trainee Management Training Fee (currently $250 per trainee per day), the On-Site Training and Assistance Fee (currently $500 per trainer per day plus expenses), the Additional Support/Consulting Fee (currently $500 per representative per day plus expenses), and the Conference/Program Fee (currently ranging from $0 to $2,500 per attendee).
This means that Carvel can increase these fees annually, but the increase is capped by the higher of two factors: a straight 50% increase of the existing fee, or the actual increase in Carvel's costs to provide the related service. For example, if the Learning Management System License Fee is $170 at the start of the year, the maximum it could be raised under the percentage option is $85 (50% of $170), resulting in a new fee of $255. However, if Carvel's costs to provide the learning system increased by $100 per franchisee, they could raise the fee by that amount instead.
For a prospective franchisee, this 'Allowed Adjustment' provides some predictability regarding potential fee increases. However, it's important to note that Carvel has the discretion to choose which of the two adjustment options to apply, and that some fees, like those related to advertising or insufficient funds, can be increased up to 110% of costs. Franchisees should carefully review all fees outlined in Item 6 of the FDD and understand how these adjustments could impact their operating costs over time.