Under what condition are Carvel's initial fees and payments deferred?

According to Carvel's 2025 Franchise Disclosure Document, in Maryland, the initial fees and payments owed by franchisees are deferred until Carvel completes its pre-opening obligations under the Franchise Agreement. This requirement is based on Carvel's financial condition, as mandated by the Maryland Securities Commissioner, who requires a financial assurance. This deferral also applies if a franchisee signs a Multi-Unit Addendum to a Franchise Agreement; in this case, all initial fees and payments owed under each Franchise Agreement subject to the Multi-Unit Addendum are deferred until Carvel completes its pre-opening obligations for each applicable Franchise Agreement.

This deferral of initial fees and payments provides a significant benefit to franchisees in Maryland, as it reduces their upfront financial burden. Instead of paying the initial fees immediately, franchisees can delay these payments until Carvel has fulfilled its obligations to prepare the franchise location for opening. This can help franchisees manage their cash flow more effectively during the initial stages of setting up their Carvel business.

However, it is important for prospective Carvel franchisees in Maryland to understand the specific pre-opening obligations that Carvel must complete before the fees become due. Franchisees should carefully review the Franchise Agreement and any Multi-Unit Addendums to fully understand these obligations and the timeline for their completion. Additionally, franchisees should be aware that this deferral is specific to Maryland and is a result of regulatory requirements related to Carvel's financial condition.