Carvel Franchise Costs, Fees & Owner Salary (2023)

Carvel, a beloved name in the ice cream industry, was founded in 1934 when Tom Carvel began selling ice cream from his vending truck. His innovative approach led to the creation of the nation's first retail ice cream company. By 1936, Carvel had formalized his business into the Carvel Corporation, pioneering the "no air pump" super-low temperature ice cream, which contributed to the brand's unique texture and taste. The company took a significant step in 1947, becoming the first to franchise a retail ice cream shop in the United States, setting the stage for widespread expansion and recognition.

The journey of Carvel is marked by continuous innovation and community engagement, from introducing the Flying Saucer® in 1951 to celebrating milestones like the 100th shoppe and the 40th birthday of Fudgie the Whale®. The company's commitment to freshness and quality has remained unchanged, with all products made right in the shoppe to ensure the best possible experience for customers.

Headquartered initially in Yonkers, New York, within the multifunctional Carvel Inn, Carvel later moved its headquarters to Farmington, Connecticut, in the 1990s to better position itself in the dessert market and to accommodate its expanding product line and franchising model. This move was part of a broader strategy to adapt and grow in a changing market, including introducing new store designs, expanding the product range, and entering supermarket distribution.

Initial Franchise Fee

The initial franchise fee structure varies depending on the type of shop. For Full Shoppes, it amounts to $30,000. In the case of Express Shoppes, the fee ranges from $10,000 to $15,000, depending on the specific location and type. Notably, Hosted Express Shoppes do not require an initial franchise fee.

Royalty Fee

Franchisees are obligated to pay a royalty fee based on a specific metric. This fee is calculated at a rate of $2.88 for each liquid gallon of the special formula mix that is required to be purchased from the designated supplier.

Transfer Fee

The transfer of ownership within the franchise system incurs a fee structure that varies based on the nature of the transfer. For a Control Transfer, franchisees are required to pay 50% of the then-current Initial Franchise Fee. However, for transfers to related parties or non-Control Transfers, the fee is set at 10%.

Renewal Fee

When it comes time to renew the franchise agreement, franchisees must be prepared to pay a fee equal to 20% of the then-current Initial Franchise Fee applicable to the type of Shoppe they operate.

Advertising Fee

The Carvel advertising fee, or "Advertising Contribution," is $2.50 per liquid gallon of Mix bought by franchisees. Co-Branded Shoppes contribute 3% of non-ice cream product Net Sales at Streetside Locations and 1.5% at Other Locations. The total of Advertising Contributions and Local Marketing Obligations for Co-Branded Shoppes is capped at 5% of Net Sales.

Carvel provides a comprehensive Management Training Program for franchisees and their required trainees, which includes both mandatory and optional training components designed to prepare them for successful franchise operation.

Mandatory Management Training Program

• The program involves a set number of required trainees, as specified in the franchise agreement, who must successfully complete Carvel's Management Training Program by a designated deadline. The franchisor has the discretion to determine if a trainee has successfully completed the program.
• In cases where a trainee does not successfully complete the program, they must re-enroll in the next scheduled training at no additional charge. Failure to meet the training completion requirements by the required number of trainees can lead to termination of the franchise agreement.
• Carvel may authorize certain franchisees to provide the Management Training Program on its behalf, under specific conditions such as having a Certified Training Manager and operating a Certified Training Business.

Additional Training and Support

• Carvel may offer additional training, conferences, and seminars on various aspects related to the franchise system. Attendance at these events may be mandatory for franchisees, their managers, and supervisory personnel.
• For franchisees operating their first or second Carvel franchise, the franchisor provides on-site training during the beginning of operations at no additional cost to the franchisee.
• Carvel may also offer consulting services and additional support after the franchise is opened, which might be subject to additional fees.

Training Fees

• If the in-person portion of the Management Training Program is held outside the franchisor's headquarters, franchisees must cover the Regional Training Fee, which ranges from $750 to $1,500 per trainee.

Carvel does not grant franchisees an exclusive territory or protected rights under the Franchise Agreement, except for certain limited conditions related to Co-Branded Shoppes in Streetside Locations. Franchisees are licensed to manufacture and sell approved products only from the accepted location, with no exclusive territorial rights granted beyond the right to sell approved products at retail from the Shoppe.

For Co-Branded Shoppes in Streetside Locations, while there is no exclusive territory, a territory with limited protected rights, referred to as an "Area of Protection," is provided. This means that during the term of the Franchise Agreement, Carvel will not establish or operate, nor license any other person to establish or operate, another Co-Branded Shoppe at a Streetside Location within the franchisee's Area of Protection.

However, Carvel retains the right to operate, or license others to operate, single-branded Shoppes or Shoppes that do not include the same combination of brands as the Co-Branded Shoppe within the Area of Protection. Carvel and its affiliates reserve the right to conduct any business activities under any name in any geographic area, including areas near the franchisee's location.

Carvel emphasizes active participation in the franchise's daily management. Franchisees are expected to devote their best efforts to the effective operation of their Franchised Business. Each Franchised Business must have a minimum number of dedicated Managers, as specified in the agreement, who are responsible for day-to-day management, on-premises supervision, and direct involvement in the business operations.

These Managers must successfully complete Carvel's Management Training Program. In certain circumstances, Carvel may allow the Primary Contact to also serve as a Manager, provided they meet the job requirements and complete the necessary training.

This structure indicates Carvel's preference for hands-on management by franchisees or their appointed Managers, suggesting a limited scope for passive investment where the owner is not actively involved in the franchise's daily operations.