How long does Carvel have to exercise its option to purchase the Interest in the Franchised Business after receiving notice of a third-party offer?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
unreasonably withheld. Our consent may be conditioned, in our sole discretion, on the written agreement by
the secured party that, in the event of a default by you under any agreement related to the security interest, we will have the right and option (but not the obligation) to purchase the rights of the secured party upon payment of all sums then due to the secured party. Any foreclosures or other exercise of the rights granted under that security interest are subject to all applicable terms and conditions of this Section 16. Notwithstanding the foregoing, however, you may grant, without obtaining our prior written approval, a security interest in the assets of the Franchised Business (not including this Agreement) to a lender for the sole purpose of financing your acquisition, development, and/or operation of the Franchised Business.
16.8 Right of First Refusal.
- A. Option Period. If you receive and want to accept a bona fide written offer from a third party to purchase the Franchised Business or substantially all the interests in you (collectively, the "Interest"), you must give us: (i) prompt written notice of the offer, stating the name and address of the prospective purchaser and the price and terms of the offer; and (ii) copies of all written documents and other information reasonably related to the offer provided by or to the prospective purchaser.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, if a franchisee receives a legitimate offer from a third party to purchase the Franchised Business or substantially all of the franchisee's interests, the franchisee must promptly notify Carvel in writing. This notice must include the name and address of the potential purchaser, the price and terms of the offer, and copies of all related written documents and information.
Following receipt of this information, Carvel has a 30-day "Option Period" to decide whether to purchase the franchisee's interest on the same terms as the third-party offer. However, if the third-party offer includes consideration other than cash, Carvel has the option to substitute the equivalent cash value. This right of first refusal allows Carvel to maintain control over who enters their franchise system and ensures that any transfer aligns with their strategic interests.
If Carvel does not exercise its right of first refusal within this 30-day Option Period, the franchisee is then permitted to sell, assign, and transfer the interest to the specified third party within 30 days after the Option Period expires, provided the sale adheres to the terms and conditions outlined in the FDD. Any material changes to the terms of the offer before the sale's closing will be considered a new offer, which would again trigger Carvel's right of first refusal.