If Carvel chooses to operate the Franchised Business after termination, is the franchisee entitled to any revenue earned during that period?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
If you dispute the validity of our termination of this Agreement, we will nevertheless have the option, which you irrevocably grant, to operate the Franchised Business pending the final, unappealed determination of the dispute under this Agreement.
If an arbitrator or court of competent jurisdiction makes a final, unappealed determination that the termination was not valid, we will make a full and complete accounting for the period during which we operated the Franchised Business.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, if Carvel terminates the Franchise Agreement due to franchisee default, Carvel has the right to take immediate possession of the franchised business to ensure continuous operation and protect its interests. In such cases, the franchisee must promptly vacate the premises and provide necessary assistance to Carvel.
Specifically, the FDD states that the franchisee will have no right to any revenue that Carvel earns while operating the franchised business post-termination. This means that even if Carvel continues to run the business and generate income, the former franchisee is not entitled to any share of those earnings.
However, if the franchisee disputes Carvel's termination and an arbitrator or court ultimately determines that the termination was invalid, Carvel is obligated to provide a full and complete accounting for the period it operated the business. This implies that if the termination is deemed wrongful, the franchisee may be entitled to compensation for the revenue Carvel earned during that period, although the document does not explicitly state this.