Within how many days after termination of the Carvel agreement must liquidated damages be paid?

According to Carvel's 2025 Franchise Disclosure Document, if the franchise agreement is terminated, the franchisee is required to pay all liquidated damages within 30 days after the termination date. These damages are intended to compensate Carvel for the loss of the benefit of the bargain they were entitled to receive under the agreement, and they are not considered a penalty.

The liquidated damages are calculated based on the average monthly Royalty Fee owed to Carvel during the 36 months before the termination date, multiplied by the lesser of the remaining term of the agreement or 36 months. If the franchise has been open for less than 36 months, the calculation is based on the average monthly Royalty Fee during the period between the opening date and the termination date, multiplied by 36. However, if the termination occurs before the opening date, the franchisee will forfeit the initial franchise fee paid but will not owe any liquidated damages.

This requirement ensures that Carvel is compensated for the financial loss resulting from the early termination of the franchise agreement. It is important for prospective franchisees to understand this obligation and factor it into their financial planning. The FDD also states that Carvel has the right to offset any credits, balances, or amounts owed to the franchisee against the amounts owed under this section.