What happens if a Carvel franchisee loses possession of the Accepted Location?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
- E.
Your interest (or your affiliate's interest) in the lease or sublease for the Accepted Location is terminated or expires or you (or your affiliate) otherwise lose possession of the Accepted Location.
- B.
Right to Acquire Accepted Location.
If we terminate this Agreement under Section 17 (Default and Termination), you will, at our option, assign to us, or another franchisee we designate, your interest in any Lease for the Accepted Location, and will vacate the Franchised Business promptly and completely, rendering all necessary assistance to us or the other franchisee to enable it to take prompt possession.
If you or one of your affiliates owns the Accepted Location, we may elect to purchase the Accepted Location or, at our option, lease the Accepted Location from you or that affiliate for an initial five-year term with one renewal term of five years (at our option) on commercially reasonable terms.
If you and we cannot agree on a
purchase price for the Accepted Location in a reasonable time, the purchase price will be determined by three independent appraisers using the Appraisal Process. If we elect to exercise this option to purchase, we may set off all amounts you owe us or our affiliates under this Agreement against any payments for the purchase. You (and your Owners) agree to cause your affiliate to comply with these requirements.
- A.
Right to Operate.
If we terminate this Agreement under Section 17 (Default and Termination), we will have the right to immediately enter and take possession of your Franchised Business to maintain continuous operation of the Franchised Business, provide for orderly change of management and disposition of personal property, and otherwise protect our interests.
If we exercise this right, you will vacate the Franchised Business promptly and completely, rendering all necessary assistance to us to enable us to take prompt possession, and you will have no right to any revenue that we earn while operating the Franchised Business.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to the 2025 Carvel FDD, if a franchisee's interest in the lease or sublease for the Accepted Location is terminated, expires, or the franchisee otherwise loses possession of the Accepted Location, it constitutes a default under the franchise agreement. This is explicitly stated as one of the conditions that can lead to the termination of the agreement.
If Carvel terminates the franchise agreement due to the franchisee losing possession of the Accepted Location, Carvel has the right to enter and take possession of the Franchised Business. This allows Carvel to maintain continuous operation, manage the change of management, dispose of personal property, and protect its interests. The franchisee is obligated to vacate the premises promptly and provide assistance to Carvel in taking possession. The franchisee forfeits any right to revenue earned by Carvel during this period of operation.
Furthermore, Carvel has the option to acquire the franchisee's interest in any lease for the Accepted Location, or designate another franchisee to take over the lease. If the franchisee or an affiliate owns the Accepted Location, Carvel may elect to purchase it or lease it for an initial five-year term with an option to renew for another five years on commercially reasonable terms. If the parties cannot agree on a purchase price, it will be determined by three independent appraisers. Carvel can also offset any amounts owed by the franchisee against payments for the purchase of the location.