Under what circumstances would a Carvel franchisee be required to pay an insurance fee to the franchisor?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee1, 4 | Amount | Date Due | Remarks |
|---|---|---|---|
| Sublease Administration Fee | Our then-current fee. Currently, $200 per month. | As incurred | If you sublease a Shoppe from us, you must pay us this fee to compensate us for our administrative expenses. The fee is in addition to any fees under the sublease such as rent, insurance, public utility charges, late fees, alterations and improvements. We may change this fee in any year by no more than the Allowed Adjustment. |
Source: Item 6 — OTHER FEES (FDD pages 31–42)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, a franchisee may be required to pay an insurance fee to Carvel under specific circumstances related to subleasing a Shoppe. If a franchisee subleases a Shoppe directly from Carvel, they will be required to pay a Sublease Administration Fee. This fee is intended to compensate Carvel for their administrative expenses related to the sublease agreement.
The Sublease Administration Fee is Carvel's then-current fee, which is currently $200 per month. This fee is incurred monthly, in addition to any other fees associated with the sublease, such as rent, public utility charges, late fees, and costs for alterations and improvements. It's important to note that Carvel retains the right to adjust this fee annually, but any increase will be subject to an 'Allowed Adjustment,' which is not defined in this excerpt.
This arrangement is fairly common in franchising, where franchisors often lease or sublease properties to franchisees. The Sublease Administration Fee ensures that Carvel is compensated for the administrative work involved in managing these subleases. A prospective Carvel franchisee should factor this monthly fee into their operating expenses if they plan to sublease their location from Carvel. It would also be prudent to inquire about the specifics of the 'Allowed Adjustment' to understand the potential for future fee increases.