Under the MUA Franchise Agreement, when must the initial franchise fees be paid to Carvel?

According to Carvel's 2025 Franchise Disclosure Document, the initial franchise fees under each MUA (Multi-Unit Addendum) Franchise Agreement must be paid in a lump sum upon the execution of the MUA Franchise Agreements. This means that a prospective franchisee must pay the entire initial franchise fee at the time of signing the agreement. Carvel has no obligation to refund any portion of the initial franchise fees, even if the addendum or any of the MUA Franchise Agreements are terminated, or if the franchisee fails to develop one or more of the MUA Businesses.

This policy has significant financial implications for franchisees. The initial investment is non-refundable under most circumstances, so franchisees should carefully consider their ability to fulfill the development schedule and operate the franchises successfully. The risk is further amplified in multi-unit agreements, as the franchisee is responsible for developing multiple locations, and failure to do so does not entitle them to a refund of the initial fees.

However, there is an exception for franchisees in Maryland. Based upon Carvel's financial condition, the Maryland Securities Commissioner requires a financial assurance. Therefore, all initial fees and payments owed by franchisees in Maryland are deferred until Carvel completes its pre-opening obligations under the Franchise Agreement. If a franchisee signs a Multi-Unit Addendum to a Franchise Agreement in Maryland, all initial fees and payments owed by such franchisee under each of the Franchise Agreements that is subject to the Multi-Unit Addendum shall be deferred until Carvel completes its pre-opening obligations under the applicable Franchise Agreement. This provides additional protection to franchisees in Maryland, ensuring that Carvel fulfills its obligations before receiving the initial franchise fees.