Does GoTo Systems guarantee Carvel's obligations under the Franchise Agreement?

According to Carvel's 2025 Franchise Disclosure Document, GoTo Systems does guarantee Carvel's performance of obligations under its franchise agreements. Item 21 further clarifies that the audited financial statements of GoTo Systems, Carvel's parent company, are attached as Exhibit A, and a copy of the guaranty of GoTo Systems is also attached as Exhibit A.

This guarantee is significant for prospective Carvel franchisees because it provides an added layer of financial security. Should Carvel, as the franchisor, fail to meet its obligations under the Franchise Agreement, GoTo Systems, as the guarantor, would be responsible for fulfilling those obligations. This reduces the risk to the franchisee, as the financial strength and stability of GoTo Systems backstops Carvel's commitments.

Furthermore, Exhibit A includes a guarantee of performance from GoTo Foods Systems LLC, which absolutely and unconditionally guarantees to assume the duties and obligations of Carvel Franchisor SPV LLC under its franchise registration and Franchise Agreement. This guarantee remains in effect until all obligations are satisfied or the liability of Carvel to its franchisees has been completely discharged. The guarantor will not be discharged from liability if a claim by a franchisee against Carvel remains outstanding. This guarantee is binding on the Guarantor and its successors and assigns.

This arrangement is not uncommon in franchising, particularly when the franchisor is a subsidiary of a larger entity. The parent company provides the guarantee to give franchisees confidence in the franchisor's ability to meet its financial and contractual obligations. Prospective franchisees should review Exhibit A carefully to understand the full scope and terms of the guarantee provided by GoTo Systems and GoTo Foods Systems LLC.