What rights does Carvel have to operate, develop, and change the System?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
We and our affiliates reserve all rights that we do not expressly grant you in this Agreement.
For example, without limitation, we and our affiliates have the following rights, without providing any rights or compensation to you:
- (1) We and/or our affiliates may establish or license franchises and/or company-owned businesses offering products or services that are similar or identical to the Approved Products using the System or elements of the System under the Marks or any other marks (a) anywhere outside of the Area of Protection, (b) in Other Locations inside or outside the Area of Protection, or (c) in businesses other than Swirl Businesses inside or outside the Area of Protection (including businesses that are co-branded with both the Carvel® and Cinnabon® brands).
12.8 Computer System.
- A. Acquisition and Operation. You must promptly purchase, lease and/or license and install at the Franchised Business, at your sole expense, the computerized point-of-sale system, computer and technology systems, mobile hardware, software, applications, associated computer hardware, telephone lines, network connections, communications equipment, high speed internet access (e.g. fiber or cable), and other equipment that we require from time to time (the "Computer System"), all of which you must keep in good maintenance and repair. You must use the Computer System in accordance with our Standards. We have the right to retrieve all data from your Computer System that we deem appropriate, and we may require you to obtain, at your expense, polling services we specify from a supplier that we specify (which may be us or our affiliates). If it becomes advisable at any time, in our sole discretion, for us to change, upgrade, or discontinue use of any of the components of the Computer System, you will comply with our directions, at your expense, within a reasonable time after notice to you. We will have no liability or obligation whatsoever with respect to our requirement that you modify or discontinue use of any of the components of the Computer System or any unauthorized modifications to the Computer System that you make.
No materials on which any of the Marks appears will be used by you without our prior written approval, which may be revoked at any time upon reasonable notice to you.
- 9.4 Changes to the Intellectual Property.
We have the right, upon reasonable notice, to change, discontinue, or substitute for any of the Intellectual Property and to adopt entirely different or new Intellectual Property for use with the System without any liability to you, in our sole discretion.
You agree to implement any such change at your own expense within the time we reasonably specify.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, Carvel and its affiliates retain all rights not expressly granted to the franchisee. This includes the right to establish or license franchises and company-owned businesses that offer similar or identical products using the Carvel system, marks, or other marks, provided they are (a) outside the franchisee's Area of Protection, (b) in Other Locations (such as airports, malls, and entertainment venues) inside or outside the Area of Protection, or (c) in businesses other than Swirl Businesses inside or outside the Area of Protection, including co-branded locations with Cinnabon. Carvel can also sell approved products through alternative channels of distribution like supermarkets and e-commerce.
Carvel also reserves the right to modify or discontinue any components of the Computer System, and franchisees are obligated to comply with these changes at their own expense within a reasonable timeframe. Carvel may also offer or require franchisees to purchase computer services from approved suppliers, with fees potentially increasing annually by the Allowed Adjustment. Fees for modifications to the Computer System or third-party hardware/software will not exceed 110% of Carvel's or its affiliates' actual costs.
Furthermore, Carvel owns all copyrights related to the System and Business concept, including manuals, recipes, building designs, and promotional materials. Carvel has the right to change, discontinue, or substitute any of the Intellectual Property used in the System without liability to the franchisee. Franchisees are required to implement these changes at their own expense within a reasonable timeframe. Franchisees cannot use materials displaying Carvel's marks without prior written approval, which Carvel can revoke at any time.
These reserved rights and required changes underscore that while franchisees operate their Carvel businesses, Carvel maintains significant control over the brand, system, and intellectual property. This allows Carvel to adapt to market changes, protect its brand identity, and explore new business avenues without necessarily compensating franchisees. Prospective franchisees should carefully consider these terms to understand the scope of their operational autonomy and the potential for required investments in system updates or changes.