Can Carvel require franchisees to purchase Goods from a single designated source?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
se 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.
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 items, referred to as "Goods," from a single designated source. These Goods encompass a range of products, ingredients, supplies, furniture, fixtures, equipment, and services necessary for operating the Carvel Shoppe. This designated source may include Carvel itself, its affiliates, or a buying cooperative organized by them. Carvel also retains the authority to add or change the list of Approved Suppliers at any time.
Carvel franchisees are obligated to acquire all Proprietary Goods, including ingredients, products, uniforms, signs, menu boards, smallwares, materials, supplies, paper goods, equipment, and packaging, from Carvel, its affiliates, or designated Approved Suppliers. This also extends to trademarked product lines like t-shirts and mugs. Carvel may also require franchisees to purchase test products from designated Approved Suppliers to assess consumer trends.
While franchisees are generally permitted to source other Goods from any supplier meeting Carvel's minimum standards, Carvel retains the discretion to designate specific suppliers as ineligible or to designate one or more Approved Suppliers for any Goods with written notice. This allows Carvel to maintain quality control and consistency across its franchise system. Carvel also specifies that neither they nor their affiliates are currently Approved Suppliers for any Goods that franchisees are required to purchase or lease, but they reserve the right to become the only Approved Supplier in the future.