What is required of all persons having an equity interest in the Carvel franchisee?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
A. Owners of Equity. If you are a corporation, limited liability company, partnership, or other entity (collectively, an "Entity"), all of your owners of a legal and/or beneficial interest in the Entity, as such owners may be added or removed from time to time in accordance with Section 16 (Transfer) (the "Owners") must execute the "Personal Covenants" that is attached in Schedule B (the "Personal Covenants") and the "Guaranty of Payment and Performance" that is attached in Schedule C (the "Guaranty"). By executing the Personal Covenants and Guaranty, each Owner will be bound by the provisions contained in this Agreement, including the restrictions set forth in Section 15 (Confidential Information; Restrictive Covenants). Further, a violation of any of the provisions of this Agreement, by any Owner will also constitute a violation by you of your obligations under this Agreement. You represent that the individuals and Entities listed as "Owners" on Schedule A are currently your sole Owners. If you add or remove Owners in accordance with Section 16 (Transfer), we may unilaterally modify the list of Owners in Schedule A to reflect your then-current ownership structure.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, all individuals holding an equity interest in a Carvel franchise entity must sign both the Personal Covenants and the Guaranty of Payment and Performance. These documents, included as Schedule B and Schedule C to the Franchise Agreement, respectively, legally bind each owner to the terms of the agreement. This requirement applies regardless of whether the franchisee is a corporation, limited liability company, partnership, or other entity.
By signing these documents, each owner agrees to be bound by the provisions of the Franchise Agreement, including the restrictions outlined in Section 15, which pertains to Confidential Information and Restrictive Covenants. This means that each owner is personally responsible for upholding these obligations, and any violation by an owner is considered a violation by the franchisee entity itself.
This requirement ensures that Carvel can enforce the Franchise Agreement against all individuals who benefit from the franchise, not just the entity. This provides Carvel with an additional layer of security and recourse in case of a breach of contract. Prospective franchisees should carefully review these documents and understand the obligations they impose on all equity holders.