What happens if a part of the Carvel franchise agreement is deemed invalid?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
If any term in these Personal Covenants or in Section 15 of the Franchise Agreement must be interpreted by a court or an arbitrator of competent jurisdiction, you agree that: (i) these Personal Covenants are made freely and voluntarily by you, an experienced businessperson, in an arms-length commercial transaction; (ii) these Personal Covenants or Section 15 of the Franchise Agreement should not be construed in the same manner or under the same body of law as analogous terms in a contract of employment; (iii) if a court or arbitrator finds that any term in these Personal Covenants or Section 15 of the Franchise Agreement is invalid or unenforceable for any reason, that term will automatically be modified to the minimum extent necessary to make it valid and enforceable, and the modification will be deemed to have been a part of these Personal Covenants or Section 15 of the Franchise Agreement as of the date you sign these Personal Covenants or the Effective Date of the Franchise Agreement, whichever is later; (iv) the court or arbitrator should strictly construe these terms in favor of enforcement; and (v) if any term could be construed two ways, one of which would render the term valid and the other of which would render the term invalid, the court or arbitrator will construe the term in the manner that renders it valid.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, if a court or arbitrator finds any term in the Personal Covenants or Section 15 of the Franchise Agreement invalid or unenforceable, the term will be automatically modified to the minimum extent necessary to make it valid and enforceable. This modification will be considered part of the Personal Covenants or Section 15 from the date you sign the Personal Covenants or the effective date of the Franchise Agreement, whichever is later. The court or arbitrator is instructed to strictly construe these terms in favor of enforcement and to interpret any ambiguous term in a way that renders it valid.
This clause ensures that as much of the original agreement as possible remains in effect, even if a specific provision is challenged and found to be invalid. It protects Carvel by ensuring that the core intentions of the agreement are upheld through modification rather than complete removal of the clause.
For a prospective franchisee, this means that challenging a part of the agreement may not result in its removal but rather in its modification to comply with legal requirements. This could impact the franchisee's rights and obligations, as the modified term will be binding from the initial agreement date. Therefore, it is crucial for franchisees to fully understand the implications of all terms before signing the agreement, as any challenges may lead to modifications that still hold them accountable.