What is the maximum fee Carvel can charge a franchisee for reviewing their systems and verifying compliance?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
luted, or contaminated Approved Products, eliminate their source, and remedy all unsanitary, unsafe, or otherwise hazardous conditions present. You may not resume operation of the Franchised Business until our laboratory analysis of your Approved Products or inspection of your Franchised Business, as applicable, demonstrates compliance with all applicable Laws and Standards. You must promptly implement any remedial measures we require to cure the default. If we conclude through any examination, analysis, and/or inspection that the Approved Products have been adulterated in any way or that your Franchised Business is not in compliance with applicable Laws, you shall, upon demand, reimburse us for all reasonable expenses connected with any such examination, analysis, or inspection under this Agreement (including reasonable product analysis fees).
- B. Additional Remedies. If: (i) we determine that a violation of Section 12.4.A. (Suspension of Operations) has occurred and that you have committed a similar violation within the one-year period before the date of the inspection or analysis; (ii) you fail or refuse to comply with any or all of the remedial measures we require; (iii) you fail to provide us with full cooperation in the course of any inspection or analysis we conduct;
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, under specific circumstances, Carvel can charge a franchisee a fee of $5,000 for an inspection or analysis related to compliance. This fee applies if a franchisee violates the suspension of operations terms and has a similar violation within one year prior to the inspection, fails to comply with required remedial measures, does not fully cooperate during an inspection, or repeats a suspension of operations violation during the term of the agreement.
In addition to the $5,000 fee, the franchisee is responsible for covering the travel and living expenses of Carvel's inspectors or representatives, as well as any other expenses, including attorney's fees, that Carvel incurs during the inspection or analysis. This means the total cost to the franchisee could exceed $5,000 depending on the extent of travel, living, and legal expenses.
It's important to note that these remedies, including the inspection fee, are in addition to any other remedies Carvel may have under the agreement, including termination rights. Carvel also reserves the right to charge non-compliance fees, ranging from $25 to $500 per violation, for failing to comply with any standards or provisions of the Franchise Agreement. These non-compliance fees can be charged repeatedly and may vary based on the severity and frequency of the defaults, subject to an annual adjustment limit.