Under the Carvel franchise agreement, does the franchisee have any protected or exclusive rights?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
mine, in our sole discretion, which when combined with the Local Marketing Obligation (as specified in Section 10.1.E. (Local Marketing Obligation)) shall
not exceed 5% of the Net Sales of the Franchised Business, payable each week on the Net Sales of the Franchised Business for the preceding week (or on any other basis stated in the Manuals or in our written notice to you). We and the Co-Branded Franchisor will jointly collect the Advertising Contribution from you based on the Net Sales of the entire Co-Branded Franchise.
11. Section 4.1 (Reserved Rights): The following provisions are added to Section 4.1 of the Agreement.
[For Streetside Locations:]
- A. Area of Protection. We grant you a protected territory in which you have certain limited exclusive rights (an "Area of Protection"). [Your Area of Protection is: a _.__ mile [OR block] radius from the Accepted Location with the Accepted Location as the center point.] [OR] [We will designate, in our sole discretion, your Area of Protection after we accept the Proposed Location as the Accepted Location. When we designate the Area of Protection for the Franchised Business, you must sign standard documentation we prepare, which includes a general release, to document the Area of Protection.] If you relocate the Franchised Business pursuant to Section 5.5 (Relocation of the Franchised Business), we will specify an Area of Protection for the new location.
- B. Protected Rights. During the Term, we will not establish or operate, nor license any other person to establish or operate, a Swirl Business at a Streetside Location within the Area of Protection. "Streetside Locations" include freestanding, inline, and endcap locations on city streets or in shopping centers (including power centers, lifestyle centers, and strip centers, but excluding malls (enclosed and open air) and outlet malls and centers).
- C. Other Locations. "Other Locations" include all locations other than Streetside Locations, including airports, amusement parks, big box stores, casinos, colleges, convenience stores, farmer's markets, military bases, malls (enclosed and open air), outlet malls and centers, sports and entertainment venues, train stations, transportation centers, travel plazas, truck stops, universities, zoos, and Delivery Kitchens. "Delivery Kitchens" include kitchens devoted to the preparation of products or Approved Products (often referred to as ghost, dark, or cloud kitchens), which may use the Marks and may deliver to customers located anywhere.
- D. Our Reserved Rights. We and our affiliates reserve all rights that we do not expressly grant you in this Agreement. For example, without limitation, we and our affiliates have the following rights, without providing any rights or compensation to you:
- (1) We and/or our affiliates may establish or license franchises and/or company-owned businesses offering products or services that are similar or identical to the Approved Products using the System or elements of the System under the Marks or any other marks (a) anywhere outside of the Area of Protection, (b) in Other Locations inside or outside the Area of Protection, or (c) in businesses other than Swirl Businesses inside or outside the Area of Protection (including businesses that are co-branded with both the Carvel® and Cinnabon® brands).
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to the 2025 Carvel Franchise Disclosure Document, the extent of a franchisee's protected rights depends on the location type. For 'Streetside Locations,' which include freestanding, inline, and endcap locations on city streets or in shopping centers (excluding malls and outlet malls), Carvel will not establish or license another person to operate a Swirl Business within the Area of Protection during the term of the agreement. However, this protection does not extend to 'Other Locations.'
'Other Locations' encompass a wide range of venues such as airports, amusement parks, big box stores, casinos, colleges, convenience stores, farmer's markets, military bases, malls, outlet malls, sports and entertainment venues, train stations, transportation centers, travel plazas, truck stops, universities, zoos, and Delivery Kitchens. For these locations, Carvel franchisees do not have any protected or exclusive rights. Carvel and its affiliates reserve the right to conduct business activities under any name, in any geographic area, and at any location, regardless of its proximity to or effect on the franchisee's business.
This means that Carvel or its affiliates can establish or license franchises or company-owned businesses offering similar products or services under any marks, including near the franchisee's location in Other Locations. They can also sell products through alternative channels like supermarkets, e-commerce, and ghost kitchens, and advertise anywhere, without providing any compensation to the franchisee. Furthermore, Carvel can acquire or merge with businesses that compete with the franchisee's business and potentially convert the franchisee's location to another brand. Therefore, franchisees should carefully consider the location type and the potential for competition when evaluating a Carvel franchise opportunity.