Does Carvel retain rights that are not specifically granted to the franchisee under the Franchise Agreement?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
Under the Franchise Agreement, we and our affiliates retain all the rights that we do not specifically grant to you. For example, without limitation, we retain the following rights, without providing any rights or compensation to you:
- (i) We and/or our affiliates may establish or license franchises and/or companyowned businesses offering products or services that are similar or identical to the Approved Products using the System or elements of the System under the Proprietary Marks or any other marks anywhere, including at or near your Accepted Location;
- (ii) We and/or our affiliates may produce and/or sell Approved Products or any other products or services, and authorize others to produce and/or sell Approved Products or any other products or services, using the Proprietary Marks, the System, and any other marks and/or systems we desire through any alternative channel of distribution located anywhere, including to and through (a) supermarkets, convenience stores, club stores, and other retail facilities not dedicated to the sale of the Approved Products, (b) mail order and e-commerce channels, and (c) kitchens devoted to the preparation of Products or Approved Products (often referred to as ghost, dark or cloud kitchens), which may use the Marks and may deliver to customers located anywhere;
- (iii) We and/or our affiliates may advertise, or authorize others to advertise, using the Proprietary Marks anywhere; and
- (iv) We and/or our affiliates may acquire, be acquired by, or merge with another entity with existing businesses or franchises that are similar to or competitive with the Shoppes
anywhere and (a) convert the other businesses to be Shoppes operating under the Proprietary Marks and the System, (b) permit the other businesses to continue to operate under another name anywhere, and/or (c) permit the businesses to operate under another name and convert your Shoppe and other existing Shoppes to such other name.
We may open or franchise new Shoppes near your Shoppe (unless we are restricted from doing so in your Area of Protection (if any)) without consulting you, giving you the first right to open them, or paying you any compensation. Other affiliate-owned or franchised Cinnabon® Shoppes near your Shoppe that are already in existence or opened later under Franchise Agreements may (i) compete directly with you, (ii) provide services in close proximity to your Shoppe without compensating you, and (iii) possibly adversely affect the operation of your Shoppe or your development of Shoppes.
Source: Item 12 — Territory (FDD pages 74–79)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, Carvel and its affiliates retain all rights not specifically granted to the franchisee. These reserved rights allow Carvel to operate and franchise businesses that may compete with a franchisee's Carvel Shoppe.
Specifically, Carvel can establish or license franchises or company-owned businesses offering similar products under Carvel's trademarks or other marks, even near a franchisee's location. Carvel can also produce and sell approved products through alternative channels of distribution like supermarkets, e-commerce, and ghost kitchens. These alternative channels can use Carvel's trademarks and deliver anywhere.
Additionally, Carvel retains the right to advertise using its trademarks anywhere and to acquire or merge with other entities that have similar or competitive businesses. These acquired businesses can be converted into Carvel Shoppes or continue operating under another name, potentially impacting existing franchisees. Carvel can also open new Carvel Shoppes near a franchisee's location without consulting them or providing compensation, unless restricted by an Area of Protection.
For prospective franchisees, this means that while you have the right to operate your Carvel Shoppe at an accepted location, Carvel retains significant control over market expansion and distribution channels. You may face competition from other Carvel outlets or alternative distribution channels, and your territorial protection may be limited, affecting your potential revenue and market share. It is important to understand the scope of these reserved rights and how they might impact your business before investing in a Carvel franchise.