Does Carvel have the right to merge with another entity that has businesses similar to Carvel and convert existing Carvel franchises to operate under the other entity's name?

According to Carvel's 2025 Franchise Disclosure Document, Carvel and its affiliates possess the right to acquire, be acquired by, or merge with another entity that has existing businesses or franchises similar to or competitive with Carvel's businesses. This broad right has several potential implications for franchisees.

First, Carvel can convert other businesses into Carvel franchises operating under Carvel's marks and system. However, this conversion excludes co-branded businesses inside a franchisee's area of protection. Second, Carvel can allow acquired businesses to continue operating under their existing names. Most significantly, Carvel has the right to require existing Carvel franchisees to operate under a different name and system if the merged entity uses a different brand.

This clause gives Carvel significant flexibility in the event of a merger or acquisition. While it allows Carvel to expand its brand by converting other businesses to Carvel franchises, it also carries the risk that a franchisee's business could be rebranded under a different name, potentially impacting brand recognition and customer loyalty. Prospective franchisees should carefully consider this possibility and its potential impact on their investment.