If the Carvel franchisee owns the Accepted Location and Carvel terminates the agreement, what options does Carvel have regarding the Accepted Location?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
If you or one of your affiliates owns the Accepted Location, we may elect to purchase the Accepted Location or, at our option, lease the Accepted Location from you or that affiliate for an initial five-year term with one renewal term of five years (at our option) on commercially reasonable terms.
If you and we cannot agree on a
purchase price for the Accepted Location in a reasonable time, the purchase price will be determined by three independent appraisers using the Appraisal Process. If we elect to exercise this option to purchase, we may set off all amounts you owe us or our affiliates under this Agreement against any payments for the purchase. You (and your Owners) agree to cause your affiliate to comply with these requirements.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, if a franchisee or their affiliate owns the Accepted Location and Carvel terminates the franchise agreement under Section 17 (Default and Termination), Carvel has the option to either purchase the location or lease it. If Carvel chooses to lease the Accepted Location, the initial term is five years, with an option for one additional five-year renewal term, with terms that are commercially reasonable.
If Carvel elects to purchase the Accepted Location, the FDD states that Carvel can offset any amounts the franchisee owes to Carvel or its affiliates against the purchase price. If the franchisee and Carvel cannot agree on a purchase price within a reasonable timeframe, the price will be determined by three independent appraisers using an Appraisal Process. The franchisee and their owners must ensure that their affiliate complies with these requirements.
This clause is significant for prospective Carvel franchisees who own the property where they plan to operate their franchise. It means that in the event of a termination, Carvel has the right to take over the property, either through purchase or lease, which could have considerable financial implications for the franchisee. It is important for franchisees to understand the terms of the purchase or lease, how the purchase price will be determined, and what rights they have in the event of a dispute.