Capriotti's Sandwich Shop

What specific factors contributed to the acceleration in unit closures from 8 in 2023 to 16 in 2024, and what is the franchisor's assessment of the closure trend going forward?

Your royalty rate of 7.0% and ad fund rate of 4.0% combine to 11.0% in total ongoing fees, which exceeds the typical range for fast-casual restaurants. How do you justify these rates compared to competitors, and are there any circumstances under which these rates could be reduced?

Can you provide detailed financial data on the units that closed in 2024 (the 16 units) - specifically their average unit volumes, how long they operated, and identified reasons for closure beyond 'closure'?

Average unit volumes of $835,358 fall approximately 10% below the category typical range. What is the franchisor's strategy to improve unit economics, and are there underperforming unit demographics or locations you can identify?

Your territory is non-exclusive with no encroachment protection. Under what circumstances might the franchisor place another Capriotti's location near or adjacent to an existing franchisee's territory?

The franchise agreement lists 13 termination causes, which is below the category typical range of 15-23. Can you clarify which termination scenarios are NOT included in your agreement that other franchisors typically include?

Item 19 shows top quartile sales of $1,270,078, which is below the category typical range of $1,308,632-$2,609,749. What percentage of franchisees achieve these top quartile results, and what characteristics do those units share?

Regarding the binding arbitration clause requiring disputes to be resolved within 10 miles of your principal business address, how have franchisees been able to negotiate arbitration location in practice?

Your personal guarantee clause requires guarantees from all stockholders, members, partners, and 'potentially spouses as requested.' Under what specific circumstances would you request a spousal guarantee, and how often has this been required?

The renewal conditions require complete remodeling, upgrading, and re-equipping at renewal. Approximately how much capital is typically required to meet the renewal remodel requirements, and can you provide recent examples?

You maintain exclusive supplier agreements across 6 specified categories. Can you identify those 6 categories and disclose whether the franchisor receives rebates or margins from these approved suppliers?

With a 10.5% annual closure rate and 19.0% turnover over 3 years, how many of the 153 current units were established 5 or more years ago, and what is the average unit lifespan in your system?

Can you provide a breakdown of your 153 current units by: (1) years in operation, (2) average unit volume by age cohort, and (3) closure rates for units by establishment year?

The franchise fee is $40,000 with a $10,000 renewal fee and $10,000 transfer fee. What is your policy regarding fee refunds if a unit closure occurs within the first year or two of operation?

With zero franchisor-initiated terminations despite a 10.5% annual closure rate, how does the franchisor distinguish between voluntary closures and situations where continued operation became untenable due to franchisor policies or brand issues?

Your scoring indicates System Health at 45/100, significantly below the category range of 50-75. What specific metrics or issues drive this below-average system health score?

Can you provide disclosure of any past class-action lawsuits, regulatory complaints, or pending investigations involving Capriotti's franchisees (even if not formal litigation) during the past 5 years?

Regarding the non-compete clause of 2 years and 5 miles, has this been enforced against franchisees who exit the system, and are there any circumstances where this clause is negotiable or waivable?

What is the franchisor's actual investment in marketing and advertising of the Capriotti's brand nationally versus the 4.0% ad fund collected from franchisees - how is the ad fund deployed?