What is the purpose of the Maryland Addendum to the Disclosure Document for Carvel?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
Indiana supersede any provisions of the Franchise Agreement and any the other agreements, or Georgia law, if these provisions are in conflict with Indiana law.
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- No release language stated in the Franchise Agreement relieves us or any other person, directly or indirectly, from liability imposed by the laws concerning franchising of the State of Indiana.
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- Notwithstanding the terms of Item 12 of the Disclosure Document and Section 4 (Reserved Rights) of the Franchise Agreement (as applicable), we will not compete unfairly with you within a reasonable area.
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- Notwithstanding the terms of Section 13.1 (Indemnification) of the Franchise Agreement, you will not be required to indemnify the Affiliated Parties for any liability caused by your proper reliance on or use of procedures or materials provided by us or caused by our negligence.
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- Section 15.4.B. (Restrictive Covenants: Post Term) of the Franchise Agreement is revised to limit the geographical extent of the post-term covenant not to compete to an area of reasonable size, for all franchises sold in the State of Indiana.
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- The prohibition by Indiana Code § 23-2-2.7-1(7) against unilateral termination of the franchise without good cause or in bad faith, good cause being defined therein as ". . . a material breach of the franchise agreement . . . ," supersede any contrary provisions contained in Section 17 (Default and Termination) of the Franchise Agreement in the State of Indiana.
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- The provisions of the Franchise Agreement relieving both parties from liability for punitive damages will not apply to franchises offered and sold in the State of Indiana.
MARYLAND ADDENDUM TO DISCLOSURE DOCUMENT
In recognition of the requirements of the Maryland Franchise Registration and Disclosure Law, the Disclosure Document for Carvel Franchisor SPV LLC for use in the State of Maryland is amended as follows:
ITEM 5 INITIAL FEES
- Based upon our financial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until we complete our pre-opening obligations under the Franchise Agreement. If a franchisee signs a Multi-Unit Addendum to a Franchise Agreement, all initial fees and payments owed by such franchisee under each of the Franchise Agreements that is subject to the Multi-Unit Addendum shall be deferred until we complete our pre-opening obligations under the applicable Franchise Agreement.
ITEM 17 RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION:
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, the Maryland Addendum serves to amend the standard disclosure document in order to comply with the Maryland Franchise Registration and Disclosure Law. This addendum modifies specific aspects of the franchise agreement to align with Maryland law.
Specifically, the addendum addresses initial fees, stating that these fees and payments are deferred until Carvel completes its pre-opening obligations under the Franchise Agreement. This requirement is based on the Maryland Securities Commissioner's mandate for financial assurance due to Carvel's financial condition. The addendum clarifies that this deferral applies to both single-unit and multi-unit franchise agreements.
Additionally, the Maryland Addendum modifies Item 17 of the disclosure document, relating to renewal, termination, transfer, and dispute resolution. It stipulates that the general release required for renewal, sale, or transfer does not apply to liabilities under Maryland's franchise laws. It also clarifies the enforceability of termination upon bankruptcy under federal law and specifies that franchisees can litigate claims arising under Maryland franchise law in Maryland, provided the dispute isn't subject to arbitration under the Franchise Agreement. Furthermore, any claims under Maryland Franchise Registration and Disclosure Law must be brought within three years after the franchise is granted.
Finally, the Franchisee Disclosure Acknowledgement explicitly states that it should not be completed by, and does not apply to, franchisees in Maryland, among other states with franchise disclosure laws. This ensures that Maryland franchisees are not subject to acknowledgements that might conflict with their rights under Maryland law.