Can the Carvel Ordering Support Fee exceed the actual costs and expenses?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
t equal to the purchase price charged to the customer less a commission, other fees, and any discounts, credits, or coupons applied to the order, such commission, fees, discounts, credits, and coupons will not be deducted from your Net Sales). Net Sales will not include (a) the initial sales or reloading of gift cards, (b) discounts, (c) the sale of food or merchandise for which refunds have been made in good faith to customers, (d) the discounted portion of employee meals, (e) sales, meals, use or excise tax imposed by a governmental authority directly on sales and collected from customers, provided that the amount for the tax is added to the selling price or absorbed therein and is actually paid by you to a governmental authority, (f) the sale of equipment used in the operation of the Franchised Business, or (g) tips.
- D. Ordering Support Fee. We require you to pay to us, our affiliates, and/or one or more third parties that we designate, an ordering support fee, in an amount and at the times that we specify, for various ordering support services that we will provide or arrange for our affiliates or third parties to provide, such as services related to online and catering ordering platforms, call center(s), ordering and delivery management services, catering rewards program(s), and the costs and expenses of integrating such services with the Computer System (as defined in Section 12.8 (Computer System)) (the "Ordering Support Fee"). The fee will not exceed 110% of our or our affiliates' actual costs and expenses related to such products or services. We periodically may add, delete, or otherwise modify the products and services that are included in the Ordering Support Fee.
- E. Technology Fee. We may require you to pay to us, or a third party that we designate, the then-current technology fee that we specify from time to time (the "Technology Fee"). The Technology Fee may be based on a percentage of Net Sales, fixed fees, and/or usage fees, provided that the fee collected will not exceed 110% of our or our affiliates' actual costs and expenses related to such products or services. We may modify the Technology Fee and payment frequency from time to time. We may replace or supplement other technology-related fees that we collect (such as the Ordering Support Fee) with the Technology Fee. We will use the Technology Fee to defray our and our affiliates' costs of developing, implementing, upgrading, operating, maintaining, supporting, or providing any technology-related products, services, programs, systems, or platforms that we, in our sole discretion, deem appropriate. We may add, delete, or otherwise modify the products, services, programs, systems, and platforms that are funded by the Technology Fee from time to time.
- F. Fee Adjustment. For any fee specified in this Agreement that may be increased by no more than the Allowed Adjustment, the "Allowed Adjustment" in any calendar year will not exceed, at our option, (a) 50% of the fee that is in effect at the start of the calendar year or (b) the increase in the actual costs and expenses that we or our affiliates incur to provide such goods or services to you.
- 3.3 Additional Payments.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, the Ordering Support Fee will not exceed 110% of Carvel's or its affiliates' actual costs and expenses related to the products or services covered by the fee. This fee is for various ordering support services, such as online and catering ordering platforms, call centers, ordering and delivery management services, catering rewards programs, and the costs of integrating these services with the Computer System.
This means that Carvel can mark up the Ordering Support Fee, but only up to a maximum of 10% above their actual costs. For a prospective franchisee, this provides some assurance that the fee is tied to actual expenses and not an arbitrary profit center. However, it's important to note that Carvel periodically may add, delete, or otherwise modify the products and services that are included in the Ordering Support Fee, which could impact the overall cost and value of the services provided.
Carvel also has the right to implement a Technology Fee, which may replace or supplement the Ordering Support Fee. Similar to the Ordering Support Fee, the Technology Fee will not exceed 110% of Carvel's or its affiliates' actual costs and expenses related to such products or services. This Technology Fee is used to cover the costs of developing, implementing, upgrading, operating, maintaining, supporting, or providing any technology-related products, services, programs, systems, or platforms that Carvel deems appropriate. As with the Ordering Support Fee, Carvel may modify the products, services, programs, systems, and platforms funded by the Technology Fee from time to time.
For co-branded franchises, Carvel and the Co-Branded Franchisor may both independently impose the Ordering Support Fee. This means that a franchisee could be charged the fee by both Carvel and the Co-Branded Franchisor, or only by Carvel, even if the Co-Branded Franchisor does not charge it. This is an important consideration for prospective franchisees considering a co-branded location.