Does Carvel have sole discretion to withhold consent for a transfer?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, Carvel generally has sole and absolute discretion to withhold consent for a transfer of the franchise. However, this is subject to exceptions outlined in Sections 16.4 through 16.7 of the franchise agreement. Carvel may refuse a transfer if the franchised business isn't operating or if the transfer would cause a breach of another agreement. For a Control Transfer, Carvel can specify additional conditions and still maintain sole discretion to grant or withhold consent.
For a Control Transfer, the franchisee must notify Carvel in writing at least 90 days before the proposed transfer and provide all requested information at least 60 days prior. All sums owed to Carvel and its affiliates must be paid.
Despite the general right to withhold consent, Carvel's discretion is somewhat limited in specific situations. For instance, regarding franchises governed by Minnesota law, Carvel must not unreasonably withhold consent to the transfer of the franchise, according to Minn. Stat. § 80C.14. Additionally, franchisees may transfer up to a 49% interest to immediate family members (or 100% upon death or disability) or a 100% interest to original guarantors, provided certain conditions are met, including giving prior written notice and complying with specific sections of the agreement. A transfer fee equal to 10% of the then-current initial franchise fee is required for certain related party transfers.
Furthermore, if a franchisee wants to grant a security interest in the Franchised Business, Carvel's consent will not be unreasonably withheld. Carvel can condition its consent on an agreement that, in the event of default, Carvel has the option to purchase the rights of the secured party. However, a franchisee can grant a security interest in the assets of the Franchised Business to a lender without Carvel's prior approval if it is solely for financing the acquisition, development, and/or operation of the Franchised Business.