Does Carvel have sole discretion to grant or withhold consent for a proposed Control Transfer?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
written consent. Any purported Transfer, without our prior written consent, will be null and void and will constitute a default under this Agreement, for which we may terminate this Agreement without opportunity to cure.
A. Requesting Consent. If you or any of your Owners desire to make a Transfer, you must promptly provide us with written notice. You agree to provide any information and documentation relating to the proposed Transfer that we reasonably require. We have the right to communicate with both you, your counsel, and the proposed transferee on any aspect of a proposed Transfer. No Control Transfer may be completed until at least 60 days after we receive all requested information to evaluate the proposed Control Transfer. No other Transfer may be completed until at least 30 days after we receive all requested information to evaluate such proposed Transfer.
B. Granting Consent. We have sole and absolute discretion to withhold our consent, except as otherwise provided in Sections 16.4 through 16.7. Without limiting the foregoing, we will not consent to a Transfer, and we are under no obligation to do so, if (i) your Franchised Business is not open and operating; or (ii) the Transfer would cause a transferee or its owners to breach another agreement (whether or not with us). Our consent to a Transfer does not constitute a waiver of any claims that we have against the transferor, nor is it a waiver of our right to demand exact compliance with the terms of this Agreement.
16.3 Control Transfer. For a proposed Control Transfer, in addition to any other conditions that we may specify and without limiting in any way our sole and absolute discretion to grant or withhold consent for a proposed Control Transfer, at a minimum, the following conditions must be satisfied (unless waived by us):
A. You notify us in writing at least 90 days prior to any proposed Control Transfer and provide all requested information at least 60 days prior to any proposed Control Transfer.
- B. All sums you owe us and our affiliates are paid.
C. You are not (i) at the time of the Transfer request or the Transfer closing, in default in any material respect under this Agreement or any other agreement with us, or any of our affiliates, or any of our Approved Suppliers and (ii) you have not been during the Term, in default in any material respect under this Agreement or any other agreement with us, any of our affiliates, or any of our Approved Suppliers without curing such default within the applicable cure period.
D. The transferee and its proposed directors, officers, shareholders, partners, and members, as applicable, and its Manager and any other personnel we designate, who will be responsible for operating and managing the Business, satisfactorily complete before the date of Transfer our Management Training Program.
E. The transferee and its directors, officers, shareholders, partners, members, and managers, as applicable, meet our requirements for approval as new franchisees, including our requirements for proficiency in the English language. If the transferee, its affiliates, or any of its directors, officers, shareholders, partners, members, or managers owns an interest in another Business or another franchise licensed by one of our affiliates, those individuals or Entities must (i) at the time of the Transfer request or the Transfer closing, not be in default in any material respect under any agreement with us, any of our affiliates, or any suppliers, (ii) during the previous two years, not have been in default in any material respect under any agreement with us, our affiliates, or any suppliers without curing such default within the applicable cure period, and (iii) in our sole judgment, have been approved to develop and operate additional franchises.
F. Notwithstanding when the Franchised Business was last remodeled, the transferee agrees in writing that it will, at its expense, upgrade, and remodel the Franchised Business to conform to our then-current Standards for quality and appearance and trade dress within the time we reasonably specify; provided, however, if the Franchised Business conforms to our then-current Standards for appearance, the transferee will only address all items identified in the last quality assurance inspection, within the time we reasonably state.
G.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, Carvel has sole and absolute discretion to withhold consent for a proposed Control Transfer, except as otherwise provided in Sections 16.4 through 16.7 of the franchise agreement. A Control Transfer is defined as any transfer of the franchise agreement, the franchised business, or a controlling interest in the franchisee entity. A controlling interest means 20% or more of the ownership interests in the franchisee entity or the power to direct the management and policies of the franchisee.
For a proposed Control Transfer, Carvel specifies several conditions that must be satisfied, unless waived by them. These conditions include providing written notice at least 90 days prior to the proposed transfer and all requested information at least 60 days prior. All sums owed to Carvel and its affiliates must be paid. The franchisee must not be in default under the Franchise Agreement or any other agreement with Carvel or its affiliates. The transferee must also meet Carvel's requirements for approval as a new franchisee, including completing the Management Training Program and meeting proficiency standards in English.
Carvel also outlines conditions related to the transferee's existing business interests. If the transferee or its affiliates have an interest in another business or franchise licensed by Carvel's affiliates, they must not be in default under any agreement with Carvel or its affiliates. They also must have been approved to develop and operate additional franchises. The franchisee and their owners must agree to remain liable for all obligations to Carvel arising before the transfer date. They must also provide written notice from the landlord agreeing to transfer the Site Agreement to the transferee.
Furthermore, Carvel must determine, in its sole discretion, that the purchase price and payment terms will not adversely affect the operation of the franchised business. If the franchisee or their owners finance any part of the purchase price, those obligations must be subordinate to the transferee's obligations to Carvel. These stipulations ensure Carvel maintains control over who becomes a franchisee and that the transfer does not negatively impact the brand or other franchisees.