Is Carvel restricted in how it uses the amounts received from manufacturers, suppliers, or third parties related to franchisee purchases?

According to Carvel's 2025 Franchise Disclosure Document, Carvel and its affiliates have considerable latitude in using revenues derived from franchisee purchases. Specifically, Carvel is not restricted in how it uses the amounts received from manufacturers, suppliers, or third parties, and may use these funds for any purpose they deem appropriate. This includes revenue from franchisee purchases and leases, charges for goods provided to franchisees, and payments from manufacturers, suppliers, or third parties in the form of promotional allowances or volume discounts.

This policy has several implications for prospective Carvel franchisees. While it allows Carvel to potentially enhance the brand and system-wide resources, it also means that franchisees have limited control over how the revenue generated from their purchases is utilized. Carvel could use these funds for various purposes, not necessarily directly benefiting the franchisees' individual operations.

This arrangement is not uncommon in franchising, where franchisors often derive revenue from various sources beyond franchise fees and royalties. However, the lack of restrictions on how Carvel uses these funds may be a point of consideration for potential franchisees evaluating the overall value and transparency of the franchise system. Franchisees may want to inquire about how these funds have been used historically and what types of investments Carvel plans to make with such revenue in the future.