For Carvel franchises operated by an Entity, what documents must the owners of legal or beneficial interest execute?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
A. Owners of Equity. If you are a corporation, limited liability company, partnership, or other entity (collectively, an "Entity"), all of your owners of a legal and/or beneficial interest in the Entity, as such owners may be added or removed from time to time in accordance with Section 16 (Transfer) (the "Owners") must execute the "Personal Covenants" that is attached in Schedule B (the "Personal Covenants") and the "Guaranty of Payment and Performance" that is attached in Schedule C (the "Guaranty"). By executing the Personal Covenants and Guaranty, each Owner will be bound by the provisions contained in this Agreement, including the restrictions set forth in Section 15 (Confidential Information; Restrictive Covenants). Further, a violation of any of the provisions of this Agreement, by any Owner will also constitute a violation by you of your obligations under this Agreement. You represent that the individuals and Entities listed as "Owners" on Schedule A are currently your sole Owners. If you add or remove Owners in accordance with Section 16 (Transfer), we may unilaterally modify the list of Owners in Schedule A to reflect your then-current ownership structure.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, if a franchisee is an Entity such as a corporation, limited liability company, or partnership, all owners of a legal or beneficial interest in that Entity must execute two specific documents. These documents are the "Personal Covenants," which is attached as Schedule B to the Franchise Agreement, and the "Guaranty of Payment and Performance," which is attached as Schedule C.
By signing these documents, each owner agrees to be bound by the provisions of the Franchise Agreement, including the restrictions outlined in Section 15 concerning Confidential Information and Restrictive Covenants. This means that the individual owners are held personally responsible for upholding these specific obligations, even though the franchise is operated through a business entity.
Furthermore, any violation of the Franchise Agreement by an owner will be considered a violation by the franchisee entity itself. This underscores the importance of ensuring that all owners are fully aware of and compliant with the terms of the agreement. Carvel also requires the franchisee to represent that the individuals and entities listed as "Owners" on Schedule A are the sole current owners, and Carvel retains the right to update this list if ownership changes occur.