What rights does Carvel have regarding operating, developing, and changing the Carvel system?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
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- 8. Section 3.1 (Initial Franchise Fee): The Initial Franchise Fee shall be equal to $_______________.
- 9. Section 3.2.A. (Royalty Fee):
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- The Royalty Fee shall be 6% of the Net Sales of the Franchised Business, payable each week on the Net Sales of the Franchised Business for the preceding week (or on any other basis stated in the Manuals or in our written notice to you).
- 11. Section 3.2.B. (Advertising Contribution):
The Advertising Contribution shall be in an amount we determine, in our sole discretion, which when combined with the Local Marketing Obligation (as specified in Section 10.1.E. (Local Marketing Obligation)) shall not exceed 5% of the Net Sales of the Franchised Business, payable each week on the Net Sales of the Franchised Business for the
preceding week (or on any other basis stated in the Manuals or in our written notice to you).
- 12. Section 4.1 (Reserved Rights): The following provisions are added to Section 4.1 of the Agreement.
- A. No Protected Rights. You do not have any protected or exclusive rights under this Agreement.
- B. Our Reserved Rights. We and our affiliates reserve all rights that we do not expressly grant you in this Agreement. We and our affiliates have the right to conduct, or authorize third parties to conduct, any business activities, under any name, in any geographic area, and at any location, regardless of the proximity to or effect on your Franchised Business. 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 anywhere, including at or near your Accepted Location.
- (2) 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 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.
- (3) We and/or our affiliates may advertise, or authorize others to advertise, using the Marks anywhere.
- (4) 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 Businesses anywhere and (i) convert the other businesses to be Businesses operating under the Marks and the System, (ii) permit the other businesses to continue to operate under another name anywhere, and/or (iii) permit the businesses to operate under another name and convert your Franchised Business and existing Businesses to such other name.
13. Section 6.5 (Opening and Development Deadlines):
| Site Approval Deadline (Section 6.5.A.) | Not applicable |
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| Construction Start Deadline (Section 6.5.B.) | Within 90 days after the Effective Date |
| Opening Deadline (Section 6.5.C.) | Within 180 days after the Effective Date |
14. Section 10.1.C. (Grand Opening Advertising):
The Grand Opening Obligation is [Select only one: for an Other Location: $3,000 [OR for a Streetside Location: $7,500.
15. Section 10.1.E. (Local Marketing Obligation):
Your Local Marketing Obligation shall be equal to 2% of the Net Sales of your Franchised Business per calendar quarter.
16. Section 11.1.C. (Attending Training):
Your Required Trainees may not begin the Management Training Program until six weeks before the scheduled opening date of your Franchised Business.
17. Section 11.2 (On-Site Training):
If this is your first or second Franchised Business (including Franchised Businesses owned by your affiliates), we will send one or more of our representatives to the Franchised Business, at our expense, for a minimum of two days of On-Site Training concurrent with beginning operations.
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 explicitly granted to the franchisee. This includes the right to conduct or authorize any business activities under any name, in any geographic area, and at any location, regardless of its proximity to or effect on the franchisee's business. This applies to both company-owned and franchised businesses. Carvel can offer similar or identical products and services using the Carvel system or elements of it, under the Carvel marks or any other marks, without providing any compensation to the franchisee.
Carvel also reserves the right to produce and sell approved products or any other products and services through alternative channels of distribution, such as supermarkets, convenience stores, e-commerce, and ghost kitchens, using the Carvel marks and system. They can advertise anywhere using the marks and can also acquire, be acquired by, or merge with another entity with similar or competitive businesses. Carvel can convert these other businesses to Carvel franchises, allow them to operate under another name, or convert the franchisee's business and existing businesses to another name.
Furthermore, Carvel has the right to change, discontinue, or substitute any of its intellectual property and adopt entirely new intellectual property for use within the system, without any liability to the franchisee. The franchisee is responsible for implementing any such changes at their own expense within a reasonable timeframe specified by Carvel. This includes changes to the computer systems, where Carvel can mandate upgrades or discontinuation of components, and the franchisee must comply at their own expense. These stipulations highlight that Carvel maintains significant control over the brand, system, and intellectual property, which may impact a franchisee's business operations and costs.