If a Carvel franchisee fails to obtain required insurance, how long do they have to cure the default?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
| Section in | ||
|---|---|---|
| Franchise | ||
| Provisions | Agreement | Summary If you do not meet these conditions by, and you continue to operate after, the expiration date of the Franchise Agreement, the Franchise Agreement will be extended on a month-to-month basis until such time as (i) the conditions above are satisfied, or (ii) we notify you that the Franchise Agreement is terminated. |
| d. Termination by you | FA: 17.1 | Not applicable, except franchisees may terminate for any grounds permitted by state law. |
| e. Termination by us | Not applicable | Not applicable |
| without cause | ||
| f. | FA: 17 | We may terminate only if you default. |
| Termination by us | ||
| with cause | ||
| g. "Cause" defined - curable defaults | FA: 17.3 | You have 24 hours to cure if: a. You refuse us permission to inspect or audit. b. Any dilution or adulteration of products at the Shoppe, or any misrepresentation, substitution, or palming off of non-Approved Products from the Shoppe operated under the Franchise Agreement. c. You fail to comply fully with all laws. You have 5 days to cure if: a. You sell, barter, or exchange any Proprietary Goods or Approved Products or other proprietary items at wholesale or retail. You have 10 days to cure if: a. You fail to pay any of your debts to us, our affiliates, or others b. You do not obtain personal covenants required under the Franchise Agreement. c. You default under your mortgage or lease. d. You fail to obtain insurance or provide proof of insurance. e. You fail to provide required reports. You have 30 days to cure if: a. You do not maintain the required financial records. b. You fail to meet the Site Approval Deadline or Construction Start Deadline. c. You breach any other provision of your Franchise |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 84–91)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, if a franchisee fails to obtain insurance or provide proof of insurance, they have 10 days to cure the default. This means that once Carvel notifies the franchisee of the deficiency, the franchisee has ten days to obtain the required insurance coverage and provide proof of that coverage to Carvel.
Failure to cure within this timeframe can lead to further action by Carvel, potentially including termination of the franchise agreement. Maintaining adequate insurance is a standard requirement in franchising, designed to protect both the franchisee and the franchisor from potential liabilities and financial losses.
It is important for prospective Carvel franchisees to understand the insurance requirements outlined in the Franchise Agreement and to ensure they can meet these requirements to avoid being in default. The franchisee should clarify with Carvel the specific types and amounts of insurance required, as well as acceptable insurance providers, during their due diligence process.