What are the potential risks associated with relying on the franchisor's referrals to leasing or financing companies for a Carvel franchise as described in Item 10?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
We do not offer direct or indirect financing. We do not guarantee your note, lease or obligation.
We may refer you to leasing or financing companies not affiliated with us. We and our affiliates receive no fees or other financial benefits from any lender for your financing. We may engage an advisor to provide consulting services to franchisees to assist them with securing financing, and we may pay the advisor for this assistance to franchisees. We will not be responsible for the consultant's provision of services to you and if you choose to use the consultant, you must sign the consultant's form of agreement. You will not be required to participate in any financing program that we implement.
We participate in the SBA's Franchise Directory. We may modify the Franchise Agreement, if necessary, to comply with SBA requirements for you to participate in certain SBA loan programs.
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, Item 10 clarifies the role Carvel plays in franchisee financing. Carvel does not offer direct or indirect financing, nor does it guarantee any franchisee's financial obligations such as notes or leases. However, Carvel may refer franchisees to unaffiliated leasing or financing companies. It's important to note that Carvel and its affiliates do not receive any fees or financial benefits from these lenders as a result of the referrals. Carvel may also engage an advisor to provide consulting services to franchisees to assist them with securing financing, and Carvel may pay the advisor for this assistance to franchisees.
While Carvel's participation in the SBA's Franchise Directory may be beneficial, prospective franchisees should be aware that Carvel is not responsible for the consultant's provision of services to you and if you choose to use the consultant, you must sign the consultant's form of agreement. Furthermore, franchisees are not required to participate in any financing program that Carvel implements.
The key risk for a potential Carvel franchisee is that while Carvel may provide referrals to financing sources or even consulting assistance, they ultimately bear the responsibility for securing their own financing and evaluating the terms. The franchisee should conduct thorough due diligence on any lender or financing program, understanding that Carvel's referral does not constitute an endorsement or guarantee of favorable terms. Engaging with their own financial and legal advisors is crucial to assess the suitability of any financing option.