Regarding Carvel co-branded franchises, what happens if the co-branded agreement terminates, expires, or the franchisee ceases to operate the co-branded franchise at the accepted location?

According to the 2025 Carvel Franchise Disclosure Document, if a franchisee's Co-Branded Agreement terminates, expires, or they cease to operate the Co-Branded Franchise at the Accepted Location, this triggers Section 17.2.M of the franchise agreement. This section falls under "Our Termination: No Opportunity to Cure," meaning Carvel can terminate the franchise agreement without allowing the franchisee a chance to fix the issue.

This condition is significant for prospective Carvel franchisees considering a co-branded location, as it creates a dependency on the Cinnabon franchise agreement. If the Cinnabon franchise fails or is terminated for any reason, the Carvel franchise is also at risk of termination, regardless of its individual performance. This interdependency adds a layer of risk beyond the typical factors considered in a single-brand franchise.

It is important for potential Carvel franchisees to fully understand the terms and conditions of both the Carvel franchise agreement and the Cinnabon franchise agreement. They should assess the stability and requirements of the Cinnabon franchise, as well as the potential consequences of any issues arising with the co-branded operation. This includes understanding the renewal conditions required by the Co-Branded Franchisor, as the franchisee must obtain the right from the Co-Branded Franchisor to continue to operate the Co-Branded Franchise at the Accepted Location for the duration of the Renewal Term.