HARTFORD, Conn. -- A group of 42 Carvel franchisees has filed a federal suit here that calls for Carvel to stop selling its ice cream products in supermarkets, claiming that practice is cannibalizing their business.
Last month's filing followed legal action begun in 1994, when Farmington, Conn.-based Carvel filed a court claim that asked for a ruling on whether the supermarket program breached its franchise agreement. As of late July, the dispute still was pending.
At issue is whether Carvel's franchise contract allows the program and if its implementation was in "good faith in .... fair dealing," said Keith J. Kanouse, a Boca Raton, Fla.-based attorney representing the franchise owners.
"The claim is seeking to declare that the supermarket program violates [Carvel's] franchise agreement, to stop the supermarket program and to reimburse the franchisees for all the damages they incurred as a result of Carvel's actions," Kanouse said. Randall C. Mathieson, vice president and general counsel at Carvel, said the supermarket program was started in April 1993 to revive business. Approximately 200 stores had closed since 1989, when founder Tom Carvel sold the company to interests affiliated with Investcorp Bank EC, New York, he said.
"The supermarket program was initiated not for the purpose of replacing retail stores but for the purpose of augmenting their ability to meet the competition," he explained.
Carvel's supermarket display, which bears the company's logo, houses ice cream cakes, Flying Saucer sandwiches, cups and cones and other novelties.