Is Carvel permitted to operate a Swirl Business within a Carvel franchisee's Area of Protection for a Streetside Location?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
mine, in our sole discretion, which when combined with the Local Marketing Obligation (as specified in Section 10.1.E. (Local Marketing Obligation)) shall
not exceed 5% of the Net Sales of the Franchised Business, payable each week on the Net Sales of the Franchised Business for the preceding week (or on any other basis stated in the Manuals or in our written notice to you). We and the Co-Branded Franchisor will jointly collect the Advertising Contribution from you based on the Net Sales of the entire Co-Branded Franchise.
11. Section 4.1 (Reserved Rights): The following provisions are added to Section 4.1 of the Agreement.
[For Streetside Locations:]
- A. Area of Protection. We grant you a protected territory in which you have certain limited exclusive rights (an "Area of Protection"). [Your Area of Protection is: a _.__ mile [OR block] radius from the Accepted Location with the Accepted Location as the center point.] [OR] [We will designate, in our sole discretion, your Area of Protection after we accept the Proposed Location as the Accepted Location. When we designate the Area of Protection for the Franchised Business, you must sign standard documentation we prepare, which includes a general release, to document the Area of Protection.] If you relocate the Franchised Business pursuant to Section 5.5 (Relocation of the Franchised Business), we will specify an Area of Protection for the new location.
- B. Protected Rights. During the Term, we will not establish or operate, nor license any other person to establish or operate, a Swirl Business at a Streetside Location within the Area of Protection. "Streetside Locations" include freestanding, inline, and endcap locations on city streets or in shopping centers (including power centers, lifestyle centers, and strip centers, but excluding malls (enclosed and open air) and outlet malls and centers).
- C. Other Locations. "Other Locations" include all locations other than Streetside Locations, including airports, amusement parks, big box stores, casinos, colleges, convenience stores, farmer's markets, military bases, malls (enclosed and open air), outlet malls and centers, sports and entertainment venues, train stations, transportation centers, travel plazas, truck stops, universities, zoos, and Delivery Kitchens. "Delivery Kitchens" include kitchens devoted to the preparation of products or Approved Products (often referred to as ghost, dark, or cloud kitchens), which may use the Marks and may deliver to customers located anywhere.
- D. Our Reserved Rights. We and our affiliates reserve all rights that we do not expressly grant you in this Agreement. For example, without limitation, we and our affiliates have the following rights, without providing any rights or compensation to you:
- (1) We and/or our affiliates may establish or license franchises and/or company-owned businesses offering products or services that are similar or identical to the Approved Products using the System or elements of the System under the Marks or any other marks (a) anywhere outside of the Area of Protection, (b) in Other Locations inside or outside the Area of Protection, or (c) in businesses other than Swirl Businesses inside or outside the Area of Protection (including businesses that are co-branded with both the Carvel® and Cinnabon® brands).
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, Carvel grants franchisees an Area of Protection where they have certain limited exclusive rights. For Streetside Locations, Carvel will not establish or operate, nor license any other person to establish or operate, a Swirl Business within the Area of Protection during the term of the agreement. Streetside Locations include freestanding, inline, and endcap locations on city streets or in shopping centers, excluding malls and outlet malls. This means that during the franchise term, Carvel will not open a competing Swirl Business or allow another franchisee to do so within the defined Area of Protection at a Streetside Location.
However, Carvel and its affiliates retain rights not expressly granted to the franchisee. They can establish or license franchises or company-owned businesses offering similar products or services outside the Area of Protection, in Other Locations (such as airports, malls, and entertainment venues) inside or outside the Area of Protection, or in businesses other than Swirl Businesses inside or outside the Area of Protection. Carvel can also produce and sell approved products through alternative channels of distribution like supermarkets and e-commerce, regardless of location.
Furthermore, Carvel, its affiliates, and other franchisees may solicit and service customers from any geographic location, including within the franchisee's Area of Protection, and provide catering and delivery services within that area. The Area of Protection can also be modified or eliminated if the franchisee defaults on the agreement and Carvel chooses not to terminate the agreement. These reserved rights and potential modifications to the Area of Protection are important considerations for prospective franchisees.