What rights does Carvel reserve regarding establishing other franchises outside of a franchisee's Area of Protection?

According to Carvel's 2025 Franchise Disclosure Document, Carvel and its affiliates retain significant rights regarding establishing other franchises outside a franchisee's Area of Protection. Specifically, Carvel can establish or license franchises and/or company-owned businesses that offer similar or identical products or services using the Carvel system and trademarks. This can occur anywhere outside the Area of Protection, in Other Locations inside or outside the Area of Protection, or in businesses other than Swirl Businesses inside or outside the Area of Protection, including co-branded businesses with Carvel and Cinnabon.

This means that a Carvel franchisee's protected territory only extends to Streetside Locations, and Carvel can establish franchises in Other Locations such as airports, amusement parks, malls, and transportation centers, even if these are within the franchisee's Area of Protection. Carvel also reserves the right to advertise anywhere, including inside and outside the Area of Protection. Furthermore, Carvel can acquire or merge with other entities that have similar or competitive businesses and convert them to Carvel franchises, allow them to operate under another name, or convert the franchisee's business to another name.

These reserved rights highlight the limited exclusivity that Carvel franchisees have. While franchisees are protected from other Carvel Swirl Businesses at Streetside Locations within their Area of Protection, Carvel retains considerable freedom to expand its brand through various channels and locations, potentially impacting a franchisee's business. A prospective franchisee should carefully consider these reserved rights and their potential impact on their investment and market share. Understanding the definitions of 'Streetside Locations' and 'Other Locations' is crucial in assessing the scope of the protected territory.