Under what conditions can Carvel acquire the Accepted Location if the franchise agreement is terminated?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
If we terminate this Agreement under Section 17 (Default and Termination), you will, at our option, assign to us, or another franchisee we designate, your interest in any Lease for the Accepted Location, and will vacate the Franchised Business promptly and completely, rendering all necessary assistance to us or the other franchisee to enable it to take prompt possession.
If you or one of your affiliates owns the Accepted Location, we may elect to purchase the Accepted Location or, at our option, lease the Accepted Location from you or that affiliate for an initial five-year term with one renewal term of five years (at our option) on commercially reasonable terms.
If you and we cannot agree on a
purchase price for the Accepted Location in a reasonable time, the purchase price will be determined by three independent appraisers using the Appraisal Process. If we elect to exercise this option to purchase, we may set off all amounts you owe us or our affiliates under this Agreement against any payments for the purchase. You (and your Owners) agree to cause your affiliate to comply with these requirements.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to the 2025 Carvel Franchise Disclosure Document, Carvel has the option to acquire the Accepted Location under specific conditions if the franchise agreement is terminated due to franchisee default. If Carvel terminates the agreement because of a default by the franchisee, Carvel has the option to have the franchisee assign their interest in the lease to Carvel or another designated franchisee. The franchisee must then vacate the premises and assist Carvel in taking possession.
If the franchisee or an affiliate owns the Accepted Location, Carvel can choose to purchase it or lease it for an initial five-year term, with an option to renew for another five years, under commercially reasonable terms. If Carvel and the franchisee cannot agree on a purchase price within a reasonable timeframe, the price will be determined by three independent appraisers through an Appraisal Process.
Carvel can offset any amounts owed by the franchisee or their affiliates against payments for the purchase of the Accepted Location. This clause ensures that Carvel has a mechanism to secure the location of the franchise, which is critical for maintaining brand presence and continuity of operations, especially after a termination due to default.