If a Carvel franchisee owner is convicted of a felony, can Carvel terminate the agreement?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
- C.
You or any of your Owners, officers, or directors: (i) are convicted of or plead no contest to a felony or a crime involving fraud or moral turpitude or any other crime that we deem likely to have an adverse effect on the good name, business, goodwill, image or reputation of the Franchised Business, the System, or the Marks, whether on a local, regional, or national scale (including any such convictions or pleas that occurred prior to the Effective Date that we learn of after the Effective Date); (ii) engage in fraudulent, deceptive, unethical, criminal, or other conduct that, in our determination, is likely to have an adverse effect on the good name, business, goodwill, image, or reputation of the Franchised Business, the System, or the Marks, whether on a local, regional, or national scale; (iii) make, or have made, any material misrepresentation to us related to the Franchised Business or this Agreement; or (iv) knowingly maintain false books or records or submit any false reports to us related to the Franchised Business.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, Carvel has the right to terminate the franchise agreement if a franchisee owner is convicted of a felony. Specifically, if a Carvel franchisee, their owners, officers, or directors are convicted of a felony, plead no contest to a felony, or commit a crime involving fraud or moral turpitude, Carvel can terminate the agreement. This also applies to any other crime that Carvel deems likely to have an adverse effect on the good name, business, goodwill, image, or reputation of the Franchised Business, the System, or the Marks, whether on a local, regional, or national scale. This includes convictions or pleas that occurred before the effective date of the agreement but are discovered after.
This provision gives Carvel broad discretion to terminate an agreement based on criminal activity, even if the crime is not directly related to the operation of the franchise. The determination of whether a crime is likely to have an adverse effect on Carvel's reputation rests with Carvel itself.
For a prospective franchisee, this means that any past or future criminal convictions, even those seemingly unrelated to the business, could jeopardize their franchise agreement. It is important to fully understand this clause and its implications before investing in a Carvel franchise. Franchisees should seek legal counsel to understand their rights and obligations under this termination clause.