How long does a Carvel franchisee have to satisfy a judgment of $10,000 or more to avoid termination?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
- D. You abandon the Franchised Business or otherwise voluntarily suspend operation of the Franchised Business without our prior written consent for five or more consecutive business days on which you were required to operate.
- E. Your interest (or your affiliate's interest) in the lease or sublease for the Accepted Location is terminated or expires or you (or your affiliate) otherwise lose possession of the Accepted Location.
- F. We send you two or more written notices of default under this Agreement for the same or a similar cause or reason in any consecutive 12-month period, whether or not cured.
- G. You: (i) become insolvent by reason of an inability to pay debts as they come due; (ii) are adjudicated bankrupt; (iii) file a petition for bankruptcy protection; (iv) are the debtor in an involuntary bankruptcy petition that is not dismissed within 60 days; (v) are the debtor in an assignment for the benefit of creditors that is not dismissed within 60 days; (vi) are the
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, a franchisee has 60 days to satisfy a final judgment of $10,000 or more to avoid potential termination of their franchise agreement. However, this condition is waived if the franchisee obtains an appeal bond covering the full amount of their liability.
This clause protects Carvel from franchisees who may be in severe financial distress, as an unpaid judgment of this size could indicate an inability to manage the business effectively. The 60-day period allows the franchisee some time to resolve the issue, either through payment or by securing an appeal bond.
For a prospective Carvel franchisee, this means it's crucial to maintain sound financial management and address any legal judgments promptly. Failure to do so could lead to the termination of the franchise agreement, resulting in the loss of their investment and business. The appeal bond option provides a safeguard, allowing the franchisee to continue operating while contesting the judgment.