If a Carvel franchisee or their employees create an Innovation related to the Carvel system, what is the franchisee obligated to do?

According to Carvel's 2025 Franchise Disclosure Document, if a franchisee or their owners, employees, or contractors create any ideas, concepts, techniques, or materials related to the Carvel business, the System, or intellectual property, these are considered "Innovations." The franchisee is obligated to promptly disclose these Innovations to Carvel. These Innovations automatically become Carvel's sole and exclusive property and are considered part of the System and Carvel's Intellectual Property.

Carvel considers these Innovations as "works made-for-hire." If any Innovation does not legally qualify as a work made-for-hire, the franchisee must assign ownership of the Innovation and all related rights to Carvel. The franchisee also agrees to sign, and ensure that their owners, employees, and contractors sign, any documents Carvel requests to evidence their ownership or to help them obtain intellectual property rights in the Innovation.

Carvel and its affiliates are not obligated to make any payments to the franchisee or anyone else for these Innovations. Furthermore, the franchisee is not allowed to use any Innovation in operating their Carvel franchise or otherwise without Carvel's prior approval. This means that while franchisees might come up with valuable improvements or new ideas, they will not own those ideas or receive compensation for them, and they cannot implement them without Carvel's permission.

This clause is fairly standard in franchising, as franchisors need to maintain uniformity and control over their brand and system. However, it's important for prospective Carvel franchisees to understand that any creative contributions they make to the system will become the property of Carvel, and they will not be able to profit from them directly or use them without approval.