Can Carvel require franchisees to purchase Approved Products?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
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We do not offer direct or indirect financing to franchisees for any of these items. The availability and terms of financing will depend on factors like the availability of financing generally, your credit worthiness, collateral you pledge, policies of your lending institution, and economic conditions in your area.
ITEM 8
RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES
Required Purchases. We have the right to require that Approved Products, other products, Proprietary Ingredients, supplies (including chemicals), furniture, fixtures, equipment, and services (collectively, "Goods") that you purchase for resale or purchase or lease for use in your Shoppe: (i) meet specifications that we establish from time to time; (ii) be a specific brand, kind, or model; (iii) be purchased or leased only from Approved Suppliers; (iv) be purchased or leased only from a single source that we designate (which may include us or our affiliates or a buying cooperative organized by us or our affiliates); and/or (v) be purchased as part of a purchasing program, arrangement, or contract that we negotiate or specify. We may add or change Approved Suppliers at any time.
You must purchase all of your requirements of Proprietary Ingredients, Proprietary Products, and proprietary uniforms, signs, menu boards, smallwares, materials, supplies, paper goods, equipment, and packaging (collectively, the "Proprietary Goods") from us, our affiliates, or our designated Approved Suppliers. The Proprietary Goods include printed paper, paper products, and plastic products bearing our Proprietary Marks (including, for example, dishes, containers, cartons, bags, napkins, and packaging supplies). We may require you to purchase certain trademarked product lines consisting of t-shirts, apparel, mugs and other merchandise and products bearing the Proprietary Marks ("Trademarked Product Lines") from us, our affiliates, or our designated Approved Suppliers. In addition, if we conduct test marketing to determine consumer trends and the salability of new food or non-food products and services, you may be required to purchase a reasonable quantity of test products we specify from designated Approved Suppliers.
For any proposed site, we may require you to obtain a site selection analysis from an Approved Supplier, which may include an analysis of such factors as traffic patterns, demographics and competitors within the market. As you design and construct your Shoppe, you must hire an architect that we accept in writing to prepare your plans and make any necessary changes to our standard layout and specifications. In addition, you must hire a licensed and insured general contractor that we accept to complete the build-out of your Shoppe. Our acceptance of your architect or general contractor will not in any way be our endorsement of your architect or general contractor or render us liable for your architect's or general contractor's performance. When you refresh or remodel your Shoppe, we may require you to obtain, at your expense, a site survey and design solution from us, our affiliates, or a designated vendor.
You must purchase and install, at your expense, all fixtures, furnishings, equipment (including a Computer System), décor and signs, as we direct. If we modify our menu, we may require you to purchase additional equipment to prepare and store new menu items. You may not install on or about your Shoppe any merchandise, furnishings, interior or exterior décor items, supplies, fixtures, equipment or utensils unless they have been approved by us in writing. You must purchase these items only from an Approved Supplier unless we specify otherwise.
You are required to purchase most of the components of the Computer System that we specify from Approved Suppliers. Currently, we have Approved Suppliers for our POS System and for certain software that you must use in your Shoppe, including the Learning Management System. We also require you to use designated Approved Suppliers for point-to-point encryption ("P2PE") solutions (hardware and software) that are used in cooperation with your POS System to provide secure and compliant payment processing services. Full Shoppes and Express Shoppes will be required to use this designated POS System; Hosted Express Shoppes and Ice Cream Trucks may use another, approved POS System with prior approval from us. If we require you to use any proprietary software or to purchase any software from a designated vendor, you must execute any software license agreements that we or the licensor of the software require and any related software maintenance agreements.
Source: Item 8 — Restrictions on Sources of Products and Services (FDD pages 52–56)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, Carvel has the right to mandate that franchisees purchase or lease specific goods for resale or use in their shops. These goods include Approved Products, other products, Proprietary Ingredients, supplies (including chemicals), furniture, fixtures, equipment, and services. Carvel can stipulate that these items meet specific standards, be a particular brand, kind, or model, and be sourced exclusively from Approved Suppliers or a single designated source, which may include Carvel or its affiliates. These purchases may also be part of a purchasing program or contract negotiated or specified by Carvel.
Carvel requires franchisees to purchase all Proprietary Goods from Carvel, its affiliates, or designated Approved Suppliers. Proprietary Goods include items like proprietary uniforms, signs, menu boards, smallwares, materials, supplies, paper goods, equipment, and packaging, especially those bearing Carvel's Proprietary Marks. Carvel may also require franchisees to purchase Trademarked Product Lines, such as t-shirts and mugs, from designated sources. Additionally, franchisees may be required to purchase test products during test marketing phases from Approved Suppliers.
Franchisees are required to purchase most components of the Computer System specified by Carvel from Approved Suppliers, including the POS System and certain software like the Learning Management System. They must also use designated Approved Suppliers for point-to-point encryption (P2PE) solutions. Carvel can mandate the use of proprietary software, requiring franchisees to execute necessary license agreements. Furthermore, franchisees must accept major credit cards and participate in Carvel's Gift Card and Loyalty Programs, potentially requiring additional equipment and incurring fees from designated vendors.
While franchisees may purchase other goods from any source meeting Carvel's minimum standards, Carvel can designate any supplier as ineligible and may designate Approved Suppliers for any goods with written notice. Carvel also reserves the right to become an Approved Supplier or the only Approved Supplier for any goods in the future. These stipulations ensure consistency and quality control across all Carvel franchise locations, but franchisees need to be aware of the potential costs and limitations associated with these required purchases.