Capriottis_Sandwich_Shop 2025 Franchise FAQ - FDD Ninja

Question 1

What is the average Sales percentage for Capriottis Sandwich Shop locations?

Accepted Answer

The first portion of this financial performance representation discloses the actual unaudited historical average, median, and high/low annual Gross Sales during 2024 for all franchised (a total of 120 in 2024) and affiliate-owned (a total of 13 in 2024) traditional CAPRIOTTI'S Restaurants in the United States that were open and operating during all of 2024. (The 13 affiliate-owned CAPRIOTTI'S Restaurants include 3 franchised Restaurants—2 in Nevada and one in Pennsylvania—that we reacquired from franchisees during February and October 2024 and therefore were affiliate-owned Restaurants as of the end of 2024.) It also discloses the actual unaudited historical average, median, and high/low annual Gross Sales during 2024 of:

- (i) the franchised (a total of 59 in 2024) and affiliate-owned (a total of 13 in 2024) traditional CAPRIOTTI'S Restaurants that operate in "mature markets" (defined in the tables below);
- (ii) the franchised (a total of 101 in 2024) and affiliate-owned (a total of 13 in 2024) traditional CAPRIOTTI'S Restaurants that had been open for more than 2 full years as of December 31, 2024; and
- (iii) the franchised (a total of 51 in 2024) and affiliate-owned (a total of 9 in 2024) traditional CAPRIOTTI'S Restaurants that had been open for more than 10 full years as of December 31, 2024.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 59–67)

Question 2

How many affiliate-owned Capriottis Sandwich Shop restaurants were included in the 2024 Gross Sales data in Item 19?

Accepted Answer

The first portion of this financial performance representation discloses the actual unaudited historical average, median, and high/low annual Gross Sales during 2024 for all franchised (a total of 120 in 2024) and affiliate-owned (a total of 13 in 2024) traditional CAPRIOTTI'S Restaurants in the United States that were open and operating during all of 2024. (The 13 affiliate-owned CAPRIOTTI'S Restaurants include 3 franchised Restaurants—2 in Nevada and one in Pennsylvania—that we reacquired from franchisees during February and October 2024 and therefore were affiliate-owned Restaurants as of the end of 2024.) It also discloses the actual unaudited historical average, median, and high/low annual Gross Sales during 2024 of:

- (i) the franchised (a total of 59 in 2024) and affiliate-owned (a total of 13 in 2024) traditional CAPRIOTTI'S Restaurants that operate in "mature markets" (defined in the tables below);
- (ii) the franchised (a total of 101 in 2024) and affiliate-owned (a total of 13 in 2024) traditional CAPRIOTTI'S Restaurants that had been open for more than 2 full years as of December 31, 2024; and
- (iii) the franchised (a total of 51 in 2024) and affiliate-owned (a total of 9 in 2024) traditional CAPRIOTTI'S Restaurants that had been open for more than 10 full years as of December 31, 2024.

However, this financial performance representation does not include the results of the following 39 Restaurants operating under the CAPRIOTTI'S Mark:

- (a) 14 traditional franchised and 2 affiliate-owned Restaurants that opened during 2024 (and therefore were not open for the full 2024 calendar year);
- (b) 16 traditional franchised Restaurants that permanently closed during 2024 (and therefore were not open for the full 2024 calendar year); and
- (c) 3 franchised Restaurants that operated at non-traditional locations (and are not our prototypical franchised Restaurants); and
- (d) 4 traditional franchised Restaurants with limited operating hours (less than 50 hours per week during 2024, while our standard operating hours are a minimum of 70 hours per week).

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 59–67)

Question 3

How many franchised Capriottis Sandwich Shop restaurants were included in the 2024 Gross Sales data in Item 19?

Accepted Answer

The first portion of this financial performance representation discloses the actual unaudited historical average, median, and high/low annual Gross Sales during 2024 for all franchised (a total of 120 in 2024) and affiliate-owned (a total of 13 in 2024) traditional CAPRIOTTI'S Restaurants in the United States that were open and operating during all of 2024. (The 13 affiliate-owned CAPRIOTTI'S Restaurants include 3 franchised Restaurants—2 in Nevada and one in Pennsylvania—that we reacquired from franchisees during February and October 2024 and therefore were affiliate-owned Restaurants as of the end of 2024.) It also discloses the actual unaudited historical average, median, and high/low annual Gross Sales during 2024 of:

- (i) the franchised (a total of 59 in 2024) and affiliate-owned (a total of 13 in 2024) traditional CAPRIOTTI'S Restaurants that operate in "mature markets" (defined in the tables below);
- (ii) the franchised (a total of 101 in 2024) and affiliate-owned (a total of 13 in 2024) traditional CAPRIOTTI'S Restaurants that had been open for more than 2 full years as of December 31, 2024; and
- (iii) the franchised (a total of 51 in 2024) and affiliate-owned (a total of 9 in 2024) traditional CAPRIOTTI'S Restaurants that had been open for more than 10 full years as of December 31, 2024.

However, this financial performance representation does not include the results of the following 39 Restaurants operating under the CAPRIOTTI'S Mark:

- (a) 14 traditional franchised and 2 affiliate-owned Restaurants that opened during 2024 (and therefore were not open for the full 2024 calendar year);
- (b) 16 traditional franchised Restaurants that permanently closed during 2024 (and therefore were not open for the full 2024 calendar year); and
- (c) 3 franchised Restaurants that operated at non-traditional locations (and are not our prototypical franchised Restaurants); and
- (d) 4 traditional franchised Restaurants with limited operating hours (less than 50 hours per week during 2024, while our standard operating hours are a minimum of 70 hours per week).

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 59–67)

Question 4

What is the projected number of new company-owned Capriottis Sandwich Shop restaurants to open in 2025?

Accepted Answer

| State | Franchise Agreements Signed But Restaurants Not Open | Projected New Franchised Restaurants in 2025 | Projected New Company-Owned Restaurants in 2025 |
|---|---|---|---|
| Alabama | 2 | 2 | 0 |
| Arizona | 2 | 1 | 0 |
| Arkansas | 2 | 1 | 0 |
| California | 2 | 2 | 0 |
| Colorado | 0 | 0 | 0 |
| Connecticut | 1 | 1 | 0 |
| Florida | 4 | 3 | 0 |
| Hawaii | 1 | 1 | 0 |
| Idaho | 3 | 2 | 0 |
| Minnesota | 1 | 1 | 0 |
| Mississippi | 1 | 1 | 0 |
| Missouri | 1 | 1 | 0 |
| Nevada | 1 | 2 | 0 |
| New Jersey | 4 | 2 | 0 |
| North Carolina | 0 | 0 | 0 |
| Ohio | 1 | 1 | 0 |
| Pennsylvania | 2 | 2 | 0 |
| South Carolina | 0 | 0 | 0 |
| Texas | 1 | 1 | 0 |
| Virginia | 1 | 1 | 0 |
| Totals | 30 | 25 | 0 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 67–73)

Question 5

What was the total acquisition purchase price for all three franchisee locations acquired by Capriottis Sandwich Shop in 2024?

Accepted Answer

ms with the mutual consent of the parties. Also, at any time prior to maturity, 50% of the original note proceeds is convertible into a 50% nonvoting equity interest in the borrower.
- (b) To finance restaurant acquisitions and provide additional working capital, Capriotti's Sparks LLC, Capriotti's Meadows LLC, and Capriotti's Sierra, LLC entered into new financing transactions during 2019 with Zeus Holdings, LLC; Dream Big Holdings, LLC (a related-party lender); and JMS Separate Property Trust (a related-party lender),

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 73)

Question 6

What was the total acquisition purchase price for all three Capriottis Sandwich Shop locations (Reno Plumb, Carson City, and Kennet Square)?

Accepted Answer

These acquisitions are accounted for as business combination. The following table summarizes the considerations paid, types of assets acquired, and goodwill recorded:

|                            | Reno Plumb                  | Carson City                   | Kennet Square                 | Total           |
|----------------------------|-----------------------------|-------------------------------|-------------------------------|-----------------|
| Acquisition date | February 2024 | February 2024 | August 2024 |  |
|  | Yerington, | Carson City, | Kennet Square, |  |
| Operates in                | Nevada                      | Nevada                        | Pennsylvania                  |                 |
| Acquisition Purchase Price | \$ 562,341               | \$ 709,191                 | \$ 50,000                  | \$ 1,321,532 |
| Cash                       | \$ 800                   | \$ 1,000                   | \$ -                       | \$ 1,800     |
| Leasehold improvement      | 13,379                      | 17,015                        | -                             | 30,394          |
| Furniture and equipment    | 54,191                      | 96,238                        | -                             | 150,429         |
| O

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 73)

Question 7

What is the total number of classroom training hours for the Capriottis Sandwich Shop training program?

Accepted Answer

| Subject | Hours of On- The-Job Training | Hours of Classroom Training* | Column4 Location |
|---|---|---|---|
| Product Recipes | 45 | 5 | Training Restaurant – Las Vegas (includes 12 hours e-learning) |
| Customer Service | 20 | 0 | Training Restaurant – Las Vegas (includes 2 hours e-learning) |
| Restaurant Management | 40 | 10 | Training Restaurant – Las Vegas and Capriotti’s Support Center |
| Prep and Cleaning in | 20 | 1 | Training Restaurant – Las Vegas |
| Restaurant |  |  | (includes 2 hours of e-learning) |
| Ordering / Inventory Training | 12 | 12 | Training Restaurant – Las Vegas; Capriotti’s Support Center for Classroom |
| POS System | 15 | 4 | Training Restaurant Las Vegas; Capriotti’s Support Center for hands-on POS Lab |
| Column 1 Subject | Column 2 Hours of On- The-Job Training | Column 3 Hours of Classroom Training* | Column4 Location |
| Finances and Accounting | 12 | 8 | Training Restaurant Las Vegas; Capriotti’s Support Center for Classroom |
| Hiring Employees | 0 | 2 | Capriotti’s Support Center for Classroom |
| Managing Employees | 10 | 3 | Training Restaurant Las Vegas; Capriotti’s Support Center for Classroom |
| Controlling Food Costs | 12 | 2 | Training Restaurant Las Vegas; Capriotti’s Support Center for Classroom |
| Neighborhood Marketing | 4 | 2 | Training Restaurant Las Vegas; Capriotti’s Support Center for Classroom |
| Ordering from Vendors | 5 | 1 | Training Restaurant Las Vegas |
| Running a Restaurant | 70 | 0 | Training Restaurant Las Vegas |
| TOTAL HOURS | 265 | 50 |  |

Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 33–42)

Question 8

What is the total number of Capriottis Sandwich Shop franchise agreements signed, but restaurants not yet open, across all listed states?

Accepted Answer

| State | Franchise Agreements Signed But Restaurants Not Open | Projected New Franchised Restaurants in 2025 | Projected New Company-Owned Restaurants in 2025 |
|---|---|---|---|
| Alabama | 2 | 2 | 0 |
| Arizona | 2 | 1 | 0 |
| Arkansas | 2 | 1 | 0 |
| California | 2 | 2 | 0 |
| Colorado | 0 | 0 | 0 |
| Connecticut | 1 | 1 | 0 |
| Florida | 4 | 3 | 0 |
| Hawaii | 1 | 1 | 0 |
| Idaho | 3 | 2 | 0 |
| Minnesota | 1 | 1 | 0 |
| Mississippi | 1 | 1 | 0 |
| Missouri | 1 | 1 | 0 |
| Nevada | 1 | 2 | 0 |
| New Jersey | 4 | 2 | 0 |
| North Carolina | 0 | 0 | 0 |
| Ohio | 1 | 1 | 0 |
| Pennsylvania | 2 | 2 | 0 |
| South Carolina | 0 | 0 | 0 |
| Texas | 1 | 1 | 0 |
| Virginia | 1 | 1 | 0 |
| Totals | 30 | 25 | 0 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 67–73)

Question 9

What was the total number of Capriottis Sandwich Shop franchise transfers across all states in 2022?

Accepted Answer

| State | Year | Number of Transfers |
|---|---|---|
| Arizona | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 1 |
| California | 2022 | 1 |
|  | 2023 | 1 |
|  | 2024 | 0 |
| Illinois | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Indiana | 2022 | 2 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Iowa | 2022 | 1 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Kansas | 2022 | 0 |
|  | 2023 | 1 |
|  | 2024 | 0 |
| Nevada | 2022 | 1 |
|  | 2023 | 0 |
|  | 2024 | 1 |
| Pennsylvania | 2022 | 2 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Totals | 2022 | 7 |
|  | 2023 | 2 |
|  | 2024 | 2 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 67–73)

Question 10

What is the total number of on-the-job training hours for the Capriottis Sandwich Shop training program?

Accepted Answer

| Subject | Hours of On- The-Job Training | Hours of Classroom Training* | Column4 Location |
|---|---|---|---|
| Product Recipes | 45 | 5 | Training Restaurant – Las Vegas (includes 12 hours e-learning) |
| Customer Service | 20 | 0 | Training Restaurant – Las Vegas (includes 2 hours e-learning) |
| Restaurant Management | 40 | 10 | Training Restaurant – Las Vegas and Capriotti’s Support Center |
| Prep and Cleaning in | 20 | 1 | Training Restaurant – Las Vegas |
| Restaurant |  |  | (includes 2 hours of e-learning) |
| Ordering / Inventory Training | 12 | 12 | Training Restaurant – Las Vegas; Capriotti’s Support Center for Classroom |
| POS System | 15 | 4 | Training Restaurant Las Vegas; Capriotti’s Support Center for hands-on POS Lab |
| Column 1 Subject | Column 2 Hours of On- The-Job Training | Column 3 Hours of Classroom Training* | Column4 Location |
| Finances and Accounting | 12 | 8 | Training Restaurant Las Vegas; Capriotti’s Support Center for Classroom |
| Hiring Employees | 0 | 2 | Capriotti’s Support Center for Classroom |
| Managing Employees | 10 | 3 | Training Restaurant Las Vegas; Capriotti’s Support Center for Classroom |
| Controlling Food Costs | 12 | 2 | Training Restaurant Las Vegas; Capriotti’s Support Center for Classroom |
| Neighborhood Marketing | 4 | 2 | Training Restaurant Las Vegas; Capriotti’s Support Center for Classroom |
| Ordering from Vendors | 5 | 1 | Training Restaurant Las Vegas |
| Running a Restaurant | 70 | 0 | Training Restaurant Las Vegas |
| TOTAL HOURS | 265 | 50 |  |

Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 33–42)

Question 11

What was the total number of Capriottis Sandwich Shop outlets closed during 2022?

Accepted Answer

| Col. 1 State | Col. 2 Year | Col. 3 Outlets at Start of the Year | Col. 4 Outlets Opened | Col. 5 Outlets Reacquired From Franchisee | Col. 6 Outlets Closed | Col. 7 Outlets Sold to Franchisee | Col. 8 Outlets at end of the Year |
|---|---|---|---|---|---|---|---|
| Arizonap | 2022 2023 2024 | 0 | 0 | 0 | 0 | 0 | 0 |
|  |  | 0 | 0 | 0 | 0 | 0 | 0 |
|  |  | 0 | 1 | 0 | 0 | 0 | 1 |
| California | 2022 2023 2024 | 2 | 0 | 0 | 0 | 2 | 0 |
|  |  | 0 | 0 | 0 | 0 | 0 | 0 |
|  |  | 0 | 0 | 0 | 0 | 0 | 0 |
| Col. 1 State | Col. 2 Year | Col. 3 Outlets at Start of the Year | Col. 4 Outlets Opened | Col. 5 Outlets Reacquired From Franchisee | Col. 6 Outlets Closed | Col. 7 Outlets Sold to Franchisee | Col. 8 Outlets at end of the Year |
| Nevada | 2022 | 11 | 0 | 0 | 1 | 0 | 10 |
|  | 2023 | 10 | 0 | 0 | 0 | 0 | 10 |
|  | 2024 | 10 | 1 | 2 | 0 | 0 | 13 |
| Pennsylvania | 2022 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2023 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2024 | 0 | 0 | 1 | 0 | 0 | 1 |
| Virginia | 2022 | 1 | 0 | 0 | 1 | 0 | 0 |
|  | 2023 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2024 | 0 | 0 | 0 | 0 | 0 | 0 |
| Totals | 2022 | 14 | 0 | 0 | 2 | 2 | 10 |
|  | 2023 | 10 | 0 | 0 | 0 | 0 | 10 |
|  | 2024 | 10 | 2 | 3 | 0 | 0 | 15 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 67–73)

Question 12

What was the total number of Capriottis Sandwich Shop outlets opened during 2024?

Accepted Answer

| Col. 1 State | Col. 2 Year | Col. 3 Outlets at Start of the Year | Col. 4 Outlets Opened | Col. 5 Outlets Reacquired From Franchisee | Col. 6 Outlets Closed | Col. 7 Outlets Sold to Franchisee | Col. 8 Outlets at end of the Year |
|---|---|---|---|---|---|---|---|
| Arizonap | 2022 2023 2024 | 0 | 0 | 0 | 0 | 0 | 0 |
|  |  | 0 | 0 | 0 | 0 | 0 | 0 |
|  |  | 0 | 1 | 0 | 0 | 0 | 1 |
| California | 2022 2023 2024 | 2 | 0 | 0 | 0 | 2 | 0 |
|  |  | 0 | 0 | 0 | 0 | 0 | 0 |
|  |  | 0 | 0 | 0 | 0 | 0 | 0 |
| Col. 1 State | Col. 2 Year | Col. 3 Outlets at Start of the Year | Col. 4 Outlets Opened | Col. 5 Outlets Reacquired From Franchisee | Col. 6 Outlets Closed | Col. 7 Outlets Sold to Franchisee | Col. 8 Outlets at end of the Year |
| Nevada | 2022 | 11 | 0 | 0 | 1 | 0 | 10 |
|  | 2023 | 10 | 0 | 0 | 0 | 0 | 10 |
|  | 2024 | 10 | 1 | 2 | 0 | 0 | 13 |
| Pennsylvania | 2022 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2023 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2024 | 0 | 0 | 1 | 0 | 0 | 1 |
| Virginia | 2022 | 1 | 0 | 0 | 1 | 0 | 0 |
|  | 2023 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2024 | 0 | 0 | 0 | 0 | 0 | 0 |
| Totals | 2022 | 14 | 0 | 0 | 2 | 2 | 10 |
|  | 2023 | 10 | 0 | 0 | 0 | 0 | 10 |
|  | 2024 | 10 | 2 | 3 | 0 | 0 | 15 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 67–73)

Question 13

What was the total number of Capriottis Sandwich Shop outlets at the start of 2022?

Accepted Answer

| Outlet Type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2022 | 110 | 126 | +16 |
|  | 2023 | 126 | 143 | +17 |
|  | 2024 | 143 | 138 | -5 |
| Company- Owned | 2022 | 14 | 10 | -4 |
|  | 2023 | 10 | 10 | 0 |
|  | 2024 | 10 | 15 | +5 |
| Total Outlets | 2022 | 124 | 136 | +12 |
|  | 2023 | 136 | 153 | +17 |
|  | 2024 | 153 | 153 | 0 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 67–73)

Question 14

What is the total projected number of new franchised Capriottis Sandwich Shop restaurants expected to open in 2025 across all states?

Accepted Answer

| State | Franchise Agreements Signed But Restaurants Not Open | Projected New Franchised Restaurants in 2025 | Projected New Company-Owned Restaurants in 2025 |
|---|---|---|---|
| Alabama | 2 | 2 | 0 |
| Arizona | 2 | 1 | 0 |
| Arkansas | 2 | 1 | 0 |
| California | 2 | 2 | 0 |
| Colorado | 0 | 0 | 0 |
| Connecticut | 1 | 1 | 0 |
| Florida | 4 | 3 | 0 |
| Hawaii | 1 | 1 | 0 |
| Idaho | 3 | 2 | 0 |
| Minnesota | 1 | 1 | 0 |
| Mississippi | 1 | 1 | 0 |
| Missouri | 1 | 1 | 0 |
| Nevada | 1 | 2 | 0 |
| New Jersey | 4 | 2 | 0 |
| North Carolina | 0 | 0 | 0 |
| Ohio | 1 | 1 | 0 |
| Pennsylvania | 2 | 2 | 0 |
| South Carolina | 0 | 0 | 0 |
| Texas | 1 | 1 | 0 |
| Virginia | 1 | 1 | 0 |
| Totals | 30 | 25 | 0 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 67–73)

Question 15

What is the trend in the total number of Capriottis Sandwich Shop franchise transfers from 2022 to 2024?

Accepted Answer

| State | Year | Number of Transfers |
|---|---|---|
| Arizona | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 1 |
| California | 2022 | 1 |
|  | 2023 | 1 |
|  | 2024 | 0 |
| Illinois | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Indiana | 2022 | 2 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Iowa | 2022 | 1 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Kansas | 2022 | 0 |
|  | 2023 | 1 |
|  | 2024 | 0 |
| Nevada | 2022 | 1 |
|  | 2023 | 0 |
|  | 2024 | 1 |
| Pennsylvania | 2022 | 2 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Totals | 2022 | 7 |
|  | 2023 | 2 |
|  | 2024 | 2 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 67–73)

Question 16

Which agreement, Franchise or Development Rights, outlines the initial and ongoing training obligations for a Capriottis Sandwich Shop?

Accepted Answer

|  | The Development Rights Agreement does not require you to buy or lease from us (or our affiliates), |
|---|---|
| our designees, or approved suppliers, or according to our specifications, any goods, services, supplies, |  |
| fixtures, equipment, inventory, computer hardware and software, or comparable items related to |  |
| establishing or operating your business under the DRA. However, each site proposed for a CAPRIOTTI’S |  |
| Restaurant must satisfy our site-selection criteria and is subject to our written acceptance. |  |
| Obligation | Section in agreement |
| a. Site selection and acquisition/lease | Franchise Agreement Section 3 Development Rights Agreement Section5 |
| b.

Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 29–32)

Question 17

Which agreement, Franchise or Development Rights, specifies advertising obligations for a Capriottis Sandwich Shop?

Accepted Answer

|  | The Development Rights Agreement does not require you to buy or lease from us (or our affiliates), |
|---|---|
| our designees, or approved suppliers, or according to our specifications, any goods, services, supplies, |  |
| fixtures, equipment, inventory, computer hardware and software, or comparable items related to |  |
| establishing or operating your business under the DRA. However, each site proposed for a CAPRIOTTI’S |  |
| Restaurant must satisfy our site-selection criteria and is subject to our written acceptance. |  |
| Obligation | Section in agreement |
| a. Site selection and acquisition/lease | Franchise Agreement Section 3 Development Rights Agreement Section5 |
| b.

Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 29–32)

Question 18

Which agreement, Franchise or Development Rights, specifies compliance with standards, policies, and operating manual obligations for a Capriottis Sandwich Shop?

Accepted Answer

| Obligation | Section in agreement |
|---|---|
| g. Compliance with standards policies/operating manual | Franchise Agreement Section 8 Not applicable under Development Rights Agreement |

Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 29–32)

Question 19

Which agreement, Franchise or Development Rights, specifies insurance obligations for a Capriottis Sandwich Shop?

Accepted Answer

|  | The Development Rights Agreement does not require you to buy or lease from us (or our affiliates), |
|---|---|
| our designees, or approved suppliers, or according to our specifications, any goods, services, supplies, |  |
| fixtures, equipment, inventory, computer hardware and software, or comparable items related to |  |
| establishing or operating your business under the DRA. However, each site proposed for a CAPRIOTTI’S |  |
| Restaurant must satisfy our site-selection criteria and is subject to our written acceptance. |  |
| Obligation | Section in agreement |
| a. Site selection and acquisition/lease | Franchise Agreement Section 3 Development Rights Agreement Se

Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 29–32)

Question 20

Which agreement, Franchise or Development Rights, specifies maintenance, appearance, and remodeling requirements for a Capriottis Sandwich Shop?

Accepted Answer

|  | The Development Rights Agreement does not require you to buy or lease from us (or our affiliates), |
|---|---|
| our designees, or approved suppliers, or according to our specifications, any goods, services, supplies, |  |
| fixtures, equipment, inventory, computer hardware and software, or comparable items related to |  |
| establishing or operating your business under the DRA. However, each site proposed for a CAPRIOTTI’S |  |
| Restaurant must satisfy our site-selection criteria and is subject to our written acceptance. |  |
| Obligation | Section in agreement |
| a. Site selection and acquisition/lease | Franchise Agreement Section 3 Development Rights Agreement Section5 |
| b. Pre-opening purchases/leases | Franchise Agreement Section 8 Not applicable under Development Rights Agreement |
| c. Site development and other pre- opening requirements | Franchise Agreement Sections 3 and 8 Development Rights Agreement Section 5 |
| d. Initial and on-going training | Franchise Agreement Section 8 Not applicable under Development Rights Agreement |
| e. Opening | Franchise Agreement Section 8 Development Rights Agreement Sections 1(a), 2(a), and 5 |
| f. Fees | Franchise Agreement Sections 2, 3, 4, and 8 Renewal Rider to Franchise Agreement Section 4 Development Rights Agreement Section 4 |
| g. Compliance with standards policies/operating manual | Franchise Agreement Section 8 Not applicable under Development Rights Agreement |
| h. Trademarks and proprietary information | Franchise Agreement Section 5 Development Rights Agreement Section 3 |
| i. Restrictions on products/services offered | Franchise Agreement Section 5 Not applicable under Development Rights Agreement |
| Obligation | Section in agreement |
| j. Warranty and customer service requirements | Franchise Agreement Section 5 Not applicable under Development Rights Agreement |
| k. Territorial development and sales quotas | Not applicable under Franchise Agreement Development Rights Agreement Sections 1(a), 2(a), and5 |
| l. Ongoing product/service purchases | Franchise Agreement Sections 5 and 8 Not applicable under Development Rights Agreement |
| m. Maintenance, appearance and remodeling requirements | Franchise Agreement Sections 5 and 8 Renewal Rider to Franchise Agreement Section 6(c) Not applicable under Development Rights Agreement |

Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 29–32)

Question 21

Which agreement, Franchise or Development Rights, specifies ongoing product/service purchase obligations for a Capriottis Sandwich Shop?

Accepted Answer

| Obligation | Section in agreement |
|---|---| 
| l. Ongoing product/service purchases | Franchise Agreement Sections 5 and 8 Not applicable under Development Rights Agreement |

Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 29–32)

Question 22

Which agreement, Franchise or Development Rights, specifies owner’s participation/management/staffing obligations for a Capriottis Sandwich Shop?

Accepted Answer

| Obligation | Section in agreement |
|---|---|
| q. Owner’s | Franchise Agreement Section 8 |
| participation/management/staffi | Not applicable under Development |
| ng | Rights Agreement |

Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 29–32)

Question 23

Which agreement, Franchise or Development Rights, specifies pre-opening purchase/lease obligations for a Capriottis Sandwich Shop?

Accepted Answer

|  | The Development Rights Agreement does not require you to buy or lease from us (or our affiliates), |
|---|---|
| our designees, or approved suppliers, or according to our specifications, any goods, services, supplies, |  |
| fixtures, equipment, inventory, computer hardware and software, or comparable items related to |  |
| establishing or operating your business under the DRA. However, each site proposed for a CAPRIOTTI’S |  |
| Restaurant must satisfy our site-selection criteria and is subject to our written acceptance. |  |
| Obligation | Section in agreement |
| a. Site selection and acquisition/lease | Franchise Agreement Section 3 Development Rights Agreement Section5 |
| b.

Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 29–32)

Question 24

Which agreement, Franchise or Development Rights, specifies restrictions on products/services offered for a Capriottis Sandwich Shop?

Accepted Answer

|  | The Development Rights Agreement does not require you to buy or lease from us (or our affiliates), |
|---|---|
| our designees, or approved suppliers, or according to our specifications, any goods, services, supplies, |  |
| fixtures, equipment, inventory, computer hardware and software, or comparable items related to |  |
| establishing or operating your business under the DRA. However, each site proposed for a CAPRIOTTI’S |  |
| Restaurant must satisfy our site-selection criteria and is subject to our written acceptance. |  |
| Obligation | Section in agreement |
| a. Site selection and acquisition/lease | Franchise Agreement Section 3 Development Rights Agreement Section5 |
| b. Pre-opening purchases/leases | Franchise Agreement Section 8 Not applicable under Development Rights Agreement |
| c. Site development and other pre- opening requirements | Franchise Agreement Sections 3 and 8 Development Rights Agreement Section 5 |
| d. Initial and on-going training | Franchise Agreement Section 8 Not applicable under Development Rights Agreement |
| e. Opening | Franchise Agreement Section 8 Development Rights Agreement Sections 1(a), 2(a), and 5 |
| f. Fees | Franchise Agreement Sections 2, 3, 4, and 8 Renewal Rider to Franchise Agreement Section 4 Development Rights Agreement Section 4 |
| g. Compliance with standards policies/operating manual | Franchise Agreement Section 8 Not applicable under Development Rights Agreement |
| h. Trademarks and proprietary information | Franchise Agreement Section 5 Development Rights Agreement Section 3 |
| i. Restrictions on products/services offered | Franchise Agreement Section 5 Not applicable under Development Rights Agreement |

Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 29–32)

Question 25

Which agreement, Franchise or Development Rights, specifies warranty and customer service requirements for a Capriottis Sandwich Shop?

Accepted Answer

| Obligation | Section in agreement |
|---|---|
| j. Warranty and customer service requirements | Franchise Agreement Section 5 Not applicable under Development Rights Agreement |

Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 29–32)

Question 26

What is the due date for the royalty fee for a Capriottis Sandwich Shop as stated in Item 6, and how does this relate to the payment schedule for the initial franchise fee in Item 5?

Accepted Answer

t located at the Accepted Location provided Franchisee complies with the procedures established by Franchisor for delivery, including delivery territories, if any, and ordering procedures.

| INITIALS:: |  |  | 4 |
|------------|--|--|---|
|            |  |  |   |

| Agreement, Franchisee shall provide to Franchisor the following:                                                                                                       |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4.1 |
| A one-time nonrefundable franchisee fee of dollars |
| (\$) (the "Initial Franchise Fee") to be paid simultaneously with the execution of this Agreement. |
| If this is a renewal franchise agreement, the renewal fee specified in Franchisee's expired Franchise |
| Agreement shall be paid in lieu of the Initial Franchise Fee. |
| 4.2 |
| A royalty equal to percent (%) of Franchisee's total Gross Sales ("Royalty |
| Fee"). The payment shall be due on the fifth (5th) day after the end of each calendar month following the                                                              |
| opening of the Franchised Restaurant ("Due Date"). Upon thirty (30) days' written notice, Franchisor can                                                               |
| commence calculating the Royalty Fee (a) bi-weekly as of the fifteenth (15th) and the last day of each                                                                 |
| calendar month, in which event the Due Date for the Royalty Fee shall be the fifth (5th) day after the end                                                             |
| of the bi-weekly period, (b) weekly on Monday for the preceding seven (7) days, in which event the Due                                                                 |
| Date for the Royalty Fee shall be the immediately following Wednesday, or (c) on such other schedule as                                                                |
| Franchisor determines in its sole judgment, including as frequently as daily, in which event the Due Date                                                              |
| for the Royalty Fee shall be the day and time Franchisor communicates to Franchisee. The Due Date, and                                                                 |
| any changes in the Due Date, will apply to all fees and other amounts payable under this Agreement on or                                                               |
| before the Due Date. In the event Franchisee's restaurant is closed without Franchisor's approval for one                                                              |
| (1) or more days ("Unauthorized Closure"), in addition to the Royalty Fee due from operations, Franchisee                                                              |
| shall remit a Royalty Fee equal to the product of the average Royalty Fee for the sixty (60) days immediately                                                          |
| preceding the date the Unapproved Closure occurred multiplied by the number of days of the Unauthorized                                                                |
| Closure. In this event, the Due Date for such payment shall be the then-applicable Due Date that Franchisor                                                            |

4. **Franchise Fee and Royalties**.

Question 27

What was the highest number of Capriottis Sandwich Shop franchise transfers in a single state during 2022?

Accepted Answer

| State | Year | Number of Transfers |
|---|---|---|
| Arizona | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 1 |
| California | 2022 | 1 |
|  | 2023 | 1 |
|  | 2024 | 0 |
| Illinois | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Indiana | 2022 | 2 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Iowa | 2022 | 1 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Kansas | 2022 | 0 |
|  | 2023 | 1 |
|  | 2024 | 0 |
| Nevada | 2022 | 1 |
|  | 2023 | 0 |
|  | 2024 | 1 |
| Pennsylvania | 2022 | 2 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Totals | 2022 | 7 |
|  | 2023 | 2 |
|  | 2024 | 2 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 67–73)

Question 28

How does the initial franchise fee for Capriottis Sandwich Shop in Item 5 compare to the architectural services fee in Item 7?

Accepted Answer

| Type of Expenditure | Amount1 | Method of Payment | When Due | Column5 To Whom Payment is Made |
|---|---|---|---|---|
| Franchise Fee2 | $40,000 | Lump Sum | When you sign Agreement | Us |
| Development | $10,000 | Lump Sum | When you sign | Us |
| Services Fee3 |  |  | Agreement |  |
| Architectural/ | $15,000 - $35,000 | Vendor’s Terms | As Incurred | Architect/ |
| Engineering Fees and |  |  |  | Engineer and/or |
| Project Management4 |  |  |  | Vendor |
| Professional Services5 | $2,000 - $10,000 | As Incurred | As Incurred | Your attorney, accountant, and other professionals |
| Permits and | $3,000 - $40,000 | As Incurred | As Incurred | Local |
| Licensing6 |  |  |  | Municipalities |
| Rent7 | $3,500 - $8,000 | Lump Sum | As Incurred | Landlord |
| Security Deposits8 | $5,000 - $20,000 | Lump Sum | Per Lease/Utility Company Requirements | Landlord / Utilities |
| Leasehold | $250,000 - $350,000 | Negotiable | Contract Terms | General |
| Improvements9 |  |  |  | Contractor |
| Furniture, Fixtures, | $150,000 - $210,000 | Vendor’s Terms | Before opening | Approved |
| Equipment, and |  |  |  | Independent |
| Smallwares10 |  |  |  | Suppliers |
| Interior Décor | $4,000 - $13,000 | Vendor’s Terms | Before opening | Vendor |
| Exterior Signage | $8,000 - $25,000 | Vendor’s Terms | Before opening | Approved Sign- Maker |
| Column 1 Type of Expenditure | Column 2 Amount1 | Column 3 Method of Payment | Column 4 When Due | Column5 To Whom Payment is Made |
| Menu Boards | $1,000 - $3,000 | Vendor’s Terms | Before opening | Vendor |
| POS System11 | $6,200 - $20,000 | Vendor’s Terms | Before opening | Vendor |
| Training12 | $15,000 - $20,000 | As Incurred | As Incurred | Various |
| Opening Inventory | $7,000 - $15,000 | Vendor’s

Question 29

How does the initial franchise fee for Capriottis Sandwich Shop in Item 5 relate to the estimated total initial investment in Item 7?

Accepted Answer

| Column 1 Type of Expenditure | Column 2 Amount1 | Column 3 Method of Payment | Column 4 When Due | Column5 To Whom Payment is Made |
|---|---|---|---|---|
| Franchise Fee2 | $40,000 | Lump Sum | When you sign | Us |
|  |  |  | Agreement |  |
| Development | $10,000 | Lump Sum | When you sign | Us |
| Services Fee3 |  |  | Agreement |  |
| Kitchen Plans and Architectural / Engineering Fees4 | $5,000 - $20,000 | Vendor’s Terms | As Incurred | Kitchen Planner/ Architect/ Engineer |
| Professional Services / Permits and Licensing5 | $500 - $10,000 | As Incurred | As Incurred | Your attorney, accountant, and other professionals |
| Rent6 | $3,500 - $8,000 | Lump Sum | As Incurred | Landlord/Host |
| Security Deposits7 | $3,500 - $15,000 | Lump Sum | Per Lease/Utility Company Requirements | Landlord / Utilities |
| Leasehold | $1,000 - $50,000 | Negotiable | Contract Terms | General |
| Improvements8 |  |  |  | Contractor |
| Furniture, Fixtures, Equipment, and Smallwares9 | $30,000 - $75,000 | Vendor’s Terms | Before opening | Equipment Vendor |
| POS System10 | $3,500 - $12,000 | Vendor’s Terms | Before opening | Vendor |
| Training11 | $15,000 | As Incurred | As Incurred | Various |
| Opening Inventory | $5,000 - $10,000 | Vendor’s Terms | Before opening | Vendor |
| New Shop Opening | $15,000 | As Incurred | Upon demand | Us |
| Plan12 |  |  |  |  |

If you sign our DRA because you commit to develop at least 3 CAPRIOTTI'S Restaurants within a designated territory, the initial franchise fee due for each restaurant slated for development, including the first restaurant, is $30,000. When you sign the DRA, you (or your Approved Affiliate) also must sign a Franchise Agreement for the first restaurant to be developed and pay us a development fee. The development fee is the sum of the following amounts: (1) the $30,000 initial franchise fee for the first restaurant to be developed under the DRA (for which you or your Approved Affiliate concurrently signs the Franchise Agreement); (2) the $10,000 Development Services Fee due for the first restaurant to be developed under the DRA; and (3) a deposit equal to $10,000 for each additional restaurant (after the first restaurant) which the DRA grants you the right to develop. We will identify the number of Restaurants you must develop, the deadlines for finding their sites and signing their leases, the deadlines for developing and opening them, and the applicable development fee before you sign the DRA.

Therefore, the total investment necessary to begin operation of your acquired development rights is $155,000 to $334,000 (if you commit to develop a minimum of 3 CAPRIOTTI'S Restaurants).

Except as provided above, the initial franchise fee and development fee are uniform for all franchisees and developers under this offering. However, we had 2 franchisees that received a 15% discount on their initial franchise fees in 2024. We participate in the VetFran program, offering a 15% discount on the initial franchise fee to military veterans providing a copy of their DD214.

Despite the payment provisions above, we will defer your payment of the initial franchise fee due under the Franchise Agreement until we have fulfilled all of our initial obligations to you under the Franchise Agreement and you have opened your Restaurant for business. You must pay us the initial franchise fee on the day you open your Restaurant for business.

Question 30

What is the range of architectural/engineering services fees for a Capriottis Sandwich Shop in Item 7, and how does this relate to the assistance provided in Item 11?

Accepted Answer

| Column 1 Type of Expenditure | Column 2 Amount1 | Column 3 Method of Payment | Column 4 When Due | Column5 To Whom Payment is Made |
|---|---|---|---|---|
| Franchise Fee2 | $40,000 | Lump Sum | When you sign | Us |
|  |  |  | Agreement |  |
| Development | $10,000 | Lump Sum | When you sign | Us |
| Services Fee3 |  |  | Agreement |  |
| Kitchen Plans and Architectural / Engineering Fees4 | $5,000 - $20,000 | Vendor’s Terms | As Incurred | Kitchen Planner/ Architect/ Engineer |

Question 31

What is the range of architectural/engineering services fees for a Capriottis Sandwich Shop in Item 7, and how does this relate to the franchisee's obligations in Item 9?

Accepted Answer

| Type of Expenditure | Amount1 | Method of Payment | When Due | Column5 To Whom Payment is Made |
|---|---|---|---|---|
| Franchise Fee2 | $40,000 | Lump Sum | When you sign Agreement | Us |
| Development | $10,000 | Lump Sum | When you sign | Us |
| Services Fee3 |  |  | Agreement |  |
| Architectural/ | $15,000 - $35,000 | Vendor’s Terms | As Incurred | Architect/ |
| Engineering Fees and |  |  |  | Engineer and/or |
| Project Management4 |  |  |  | Vendor |
| Professional Services5 | $2,000 - $10,000 | As Incurred | As Incurred | Your attorney, accountant, and other professionals |
| Permits and | $3,000 - $40,000 | As Incurred | As Incurred | Local |
| Licensing6 |  |  |  | Municipalities |
| Rent7 | $3,500 - $8,000 | Lump Sum | As Incurred | Landlord |
| Security Deposits8 | $5,000 - $20,000 | Lump Sum | Per Lease/Utility Company Requirements | Landlord / Utilities |
| Leasehold | $250,000 - $350,000 | Negotiable | Contract Terms | General |
| Improvements9 |  |  |  | Contractor |
| Furniture, Fixtures, | $150,000 - $210,000 | Vendor’s Terms | Before opening | Approved |
| Equipment, and |  |  |  | Independent |
| Smallwares10 |  |  |  | Suppliers |
| Interior Décor | $4,000 - $13,000 | Vendor’s Terms | Before opening | Vendor |
| Exterior Signage | $8,000 - $25,000 | Vendor’s Terms | Before opening | Approved Sign- Maker |
| Column 1 Type of Expenditure | Column 2 Amount1 | Column 3 Method of Payment | Column 4 When Due | Column5 To Whom Payment is Made |
| Menu Boards | $1,000 - $3,000 | Vendor’s Terms | Before opening | Vendor |
| POS System11 | $6,200 - $20,000 | Vendor’s Terms | Before opening | Vendor |
| Training12 | $15,000 - $20

Question 32

What is the range of architectural/engineering services fees for a Capriottis Sandwich Shop in Item 7, and how does this relate to the initial franchise fee in Item 5?

Accepted Answer

| Column 1 Type of Expenditure | Column 2 Amount1 | Column 3 Method of Payment | Column 4 When Due | Column5 To Whom Payment is Made |
|---|---|---|---|---|
| Franchise Fee2 | $40,000 | Lump Sum | When you sign | Us |
|  |  |  | Agreement |  |
| Development | $10,000 | Lump Sum | When you sign | Us |
| Services Fee3 |  |  | Agreement |  |
| Kitchen Plans and Architectural / Engineering Fees4 | $5,000 - $20,000 | Vendor’s Terms | As Incurred | Kitchen Planner/ Architect/ Engineer |

Question 33

What is the range of architectural/engineering services fees for a Capriottis Sandwich Shop in Item 7, and how does this relate to the lack of financing options in Item 10?

Accepted Answer

| Column 1 Type of Expenditure | Column 2 Amount1 | Column 3 Method of Payment | Column 4 When Due | Column5 To Whom Payment is Made | |---|---|---|---|---| | Kitchen Plans and Architectural / Engineering Fees4 | $5,000 - $20,000 | Vendor’s Terms | As Incurred | Kitchen Planner/ Architect/ Engineer | ¹⁷We do not offer financing directly or indirectly for any part of the initial investment. The availability and terms of financing depend on many factors, including your creditworthiness, collateral, and the lending policies of financial institutions from which you request a loan. An estimated initial investment will be incurred for each CAPRIOTTI'S Restaurant established under a Development Rights Agreement.

Question 34

What is the range of architectural/engineering services fees for a Capriottis Sandwich Shop in Item 7, and how does this relate to the restrictions on sources of products and services in Item 8?

Accepted Answer

| Type of Expenditure | Amount1 | Method of Payment | When Due | Column5 To Whom Payment is Made |
|---|---|---|---|---|
| Franchise Fee2 | $40,000 | Lump Sum | When you sign Agreement | Us |
| Development | $10,000 | Lump Sum | When you sign | Us |
| Services Fee3 |  |  | Agreement |  |
| Architectural/ | $15,000 - $35,000 | Vendor’s Terms | As Incurred | Architect/ |
| Engineering Fees and |  |  |  | Engineer and/or |
| Project Management4 |  |  |  | Vendor |
| Professional Services5 | $2,000 - $10,000 | As Incurred | As Incurred | Your attorney, accountant, and other professionals |
| Permits and | $3,000 - $40,000 | As Incurred | As Incurred | Local |
| Licensing6 |  |  |  | Municipalities |
| Rent7 | $3,500 - $8,000 | Lump Sum | As Incurred | Landlord |
| Security Deposits8 | $5,000 - $20,000 | Lump Sum | Per Lease/Utility Company Requirements | Landlord / Utilities |
| Leasehold | $250,000 - $350,000 | Negotiable | Contract Terms | General |
| Improvements9 |  |  |  | Contractor |
| Furniture, Fixtures, | $150,000 - $210,000 | Vendor’s Terms | Before opening | Approved |
| Equipment, and |  |  |  | Independent |
| Smallwares10 |  |  |  | Suppliers |
| Interior Décor | $4,000 - $13,000 | Vendor’s Terms | Before opening | Vendor |
| Exterior Signage | $8,000 - $25,000 | Vendor’s Terms | Before opening | Approved Sign- Maker |
| Column 1 Type of Expenditure | Column 2 Amount1 | Column 3 Method of Payment | Column 4 When Due | Column5 To Whom Payment is Made |
| Menu Boards | $1,000 - $3,000 | Vendor’s Terms | Before opening | Vendor |
| POS System11 | $6,200 - $20,000 | Vendor’s Terms | Before opening | Vendor |
| Training12 | $15,000 - $20

Question 35

What is the range of architectural/engineering services fees for a Capriottis Sandwich Shop in Item 7, and how does this relate to the restrictions on trademark usage in Item 13?

Accepted Answer

Upon execution of the Franchise Agreement, we will grant you the non-exclusive right and privilege to use the Marks in your CAPRIOTTI'S SANDWICH SHOP Restaurant. You may not use any of our Marks as part of your firm or corporate name. You may not use the Marks for the sale of unauthorized products or services or in any manner not authorized in writing by us. Any right or privilege you may have to use our Marks will terminate in full when you are no longer in good standing or upon the expiration or termination of your Franchise Agreement. The Development Rights Agreement does not grant you the right to use the Marks. These rights arise only under Franchise Agreements you sign with us. All rights in and goodwill from the use of the Marks accrue to us.

Question 36

What is the range of architectural/engineering services fees for a Capriottis Sandwich Shop in Item 7, and how does this relate to the royalty fees in Item 6?

Accepted Answer

⁴This fee represents the cost of plans and specifications paid to an approved kitchen designer, architectural and engineering services, and support services. We may require that you use approved vendors and a construction management firm to manage the construction process for your location. The cost for the development of construction documents can vary depending on the state or municipality where your Restaurant will be built.

Question 37

What is the relationship between the initial franchise fee for a Capriottis Sandwich Shop in Item 5 and the ongoing royalty fees detailed in Item 6?

Accepted Answer

1. The following language is added as the last paragraphs of Items 5 and 7 of the Franchise Disclosure Document:

Despite the payment provisions above, we will defer your payment of the initial franchise fee due under the Franchise Agreement until we have fulfilled all of our initial obligations to you under the Franchise Agreement and you have opened your Restaurant for business. You must pay us the initial franchise fee on the day you open your Restaurant for business.

Despite the payment provisions above, we will defer your payment of the development fee due under the Development Rights Agreement until we have fulfilled all of our initial obligations to you and you have opened your first CAPRIOTTI'S Restaurant for business. You must pay us the full development fee due under the Development Rights Agreement on the day you open your first CAPRIOTTI'S Restaurant for business.

Question 38

How does the royalty fee percentage for Capriottis Sandwich Shop in Item 6 compare to the initial franchise fee in Item 5?

Accepted Answer

The franchise agreement (and related documents, including Guaranty and Assumption of Obligations) that you and your owners (or your Approved Affiliate and its owners) must sign for each CAPRIOTTI'S Restaurant to be constructed and developed pursuant to this DRA will be our then-current form of franchise agreement (and related documents, including Guaranty and Assumption of Obligations), any or all terms of which may differ substantially and materially from any or all terms contained in the First Franchise Agreement, provided that the Royalty Fee due for each CAPRIOTTI'S Restaurant to be developed under this DRA will be six percent (6%) of the CAPRIOTTI'S Restaurant's "Gross Sales" (as defined in Section 4.2 of the First Franchise Agreement).

If you fail to construct and

develop at least three (3) CAPRIOTTI'S Restaurants under this DRA according to the Schedule, the Royalty Fee on all of your (and your Approved Affiliates') operating CAPRIOTTI'S Restaurants will immediately rise to seven percent (7%) of Gross Sales for the remainder of their franchise terms.

Question 39

What is the royalty fee percentage for a single-unit Capriottis Sandwich Shop franchisee?

Accepted Answer

The following two line-items calculate (i) the Royalty Fee at 7%, as would be payable by a franchisee that operates a single Restaurant (instead of at the 6% rate that is paid by a multi-unit developer, as noted above and in footnote 9), and (ii) the adjusted EBITDA (see footnote 13) at the 7% (rather than the 6%) Royalty Fee rate:

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 59–67)

Question 40

In which states did Capriottis Sandwich Shop franchises have zero transfers in all three years (2022, 2023, and 2024)?

Accepted Answer

| State | Year | Number of Transfers |
|---|---|---|
| Arizona | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 1 |
| California | 2022 | 1 |
|  | 2023 | 1 |
|  | 2024 | 0 |
| Illinois | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Indiana | 2022 | 2 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Iowa | 2022 | 1 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Kansas | 2022 | 0 |
|  | 2023 | 1 |
|  | 2024 | 0 |
| Nevada | 2022 | 1 |
|  | 2023 | 0 |
|  | 2024 | 1 |
| Pennsylvania | 2022 | 2 |
|  | 2023 | 0 |
|  | 2024 | 0 |
| Totals | 2022 | 7 |
|  | 2023 | 2 |
|  | 2024 | 2 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 67–73)

Question 41

Under which agreement, Franchise or Development Rights, are site development and other pre-opening requirements specified for a Capriottis Sandwich Shop?

Accepted Answer

|  | The Development Rights Agreement does not require you to buy or lease from us (or our affiliates), |
|---|---|
| our designees, or approved suppliers, or according to our specifications, any goods, services, supplies, |  |
| fixtures, equipment, inventory, computer hardware and software, or comparable items related to |  |
| establishing or operating your business under the DRA. However, each site proposed for a CAPRIOTTI’S |  |
| Restaurant must satisfy our site-selection criteria and is subject to our written acceptance. |  |
| Obligation | Section in agreement |
| a. Site selection and acquisition/lease | Franchise Agreement Section 3 Development Rights Agreement Section5 |
| b. Pre-opening purchases/leases | Franchise Agreement Section 8 Not applicable under Development Rights Agreement |
| c. Site development and other pre- opening requirements | Franchise Agreement Sections 3 and 8 Development Rights Agreement Section 5 |
| d. Initial and on-going training | Franchise Agreement Section 8 Not applicable under Development Rights Agreement |
| e. Opening | Franchise Agreement Section 8 Development Rights Agreement Sections 1(a), 2(a), and 5 |
| f.

Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 29–32)

Question 42

Under which agreement, Franchise or Development Rights, are territorial development and sales quotas specified for a Capriottis Sandwich Shop?

Accepted Answer

| Obligation | Section in agreement |
|---|---|
| k. Territorial development and sales quotas | Not applicable under Franchise Agreement Development Rights Agreement Sections 1(a), 2(a), and5 |

Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 29–32)

Question 43

Under what condition is a Capriottis Sandwich Shop Franchised Restaurant prohibited from opening for business?

Accepted Answer

- 11.1 Franchisee shall immediately cease to operate the Franchised Restaurant and will not directly or indirectly represent to the public or hold itself out as a CAPRIOTTI'S SANDWICH SHOP franchisee with respect to such business.

- 11.2 Franchisee shall immediately and permanently cease to use in any manner all Franchisor Non-Mark Proprietary IP, methods, procedures and techniques used by or associated with the System, the Marks and distinctive forms, slogans, signs, symbols, logos and devices associated with the System.

- 11.3 Franchisee shall immediately return to Franchisor any property held or used by Franchisee which is owned by Franchisor and shall cease to use, and shall either destroy or convey to Franchisor, all signs, advertising materials, displays, stationary, forms and any other materials that bear or display the Marks.

Source: Item 22 — CONTRACTS (FDD page 73)

Question 44

According to California Civil Code Section 1542, how does a general release apply to claims unknown at the time of execution for a Capriotti's Sandwich Shop franchisee?

Accepted Answer

**[Each of the parties granting a release acknowledges a familiarity with Section 1542 of the Civil Code of the State of California, which provides as follows:**

**"A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or releasing party."**

Source: Item 22 — CONTRACTS (FDD page 73)

Question 45

According to the FDD, can a Capriottis Sandwich Shop franchisee waive claims under applicable state franchise law in California?

Accepted Answer

The following provision applies only to franchisees and franchises that are subject to the state franchise registration/disclosure laws in California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, or Wisconsin:

No statement, questionnaire, or acknowledgement signed or agreed to by Franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by Franchisor, any franchise seller, or any other person acting on Franchisor's behalf. This provision supersedes any other term of any document executed in connection with the franchise.

Source: Item 22 — CONTRACTS (FDD page 73)

Question 46

According to the Rider, can a Capriottis Sandwich Shop franchisee bring an action in North Dakota, and under what condition?

Accepted Answer

8. CONSENT TO JURISDICTION. The following language is added to the end of Section 27 of the Franchise Agreement:

However, to the extent required by applicable law, but subject to Franchisee's arbitration obligations, Franchisee may bring an action in North Dakota.

Source: Item 23 — RECEIPTS (FDD pages 73–303)

Question 47

Who bears the cost of the independent accounting firm's evaluation of fair market value for Capriotti's Sandwich Shop?

Accepted Answer

- 16. **Determination of Fair Market Value**. For the purpose of exercising certain rights to purchase described in this Agreement, fair market value shall be mutually determined by the corporate accountant for Franchisor and the corporate accountant for Franchisee. In the event of a disagreement, the aforesaid accountants shall appoint an independent accountant that has not provided services to either Franchisee or Franchisor for three (3) years before such appointment whose determination shall be binding. In the further event that within thirty (30) days after attempting to choose an independent accountant, the two parties' accountants are unable to agree on a third independent accountant, then each party's accountant shall identify an independent accounting firm, and a firm will be randomly selected from those identified by flipping a coin. The selected accounting firm shall evaluate fair market value, and its determination shall be binding.

Source: Item 22 — CONTRACTS (FDD page 73)

Question 48

Besides the Rider, does the Renewal Franchise Agreement for Capriottis Sandwich Shop remain in effect as originally written?

Accepted Answer

1. **Background**. This Renewal Rider to Franchise Agreement (the "Rider") is between Capriotti's Sandwich Shop, Inc. ("**Franchisor**") and *<>* ("**Franchisee**"). This Rider will be deemed effective as of *<>* (**the "Effective Date"**). Simultaneously with signing this Rider, Franchisor and Franchisee are signing a Franchise Agreement (**the "Renewal Franchise Agreement"**) to govern Franchisee's continued operation of its franchised CAPRIOTTI'S SANDWICH SHOP Restaurant located at *<>* (the "**Franchised Restaurant**"). (All initial capitalized terms used but not defined in this Rider will have the meanings given to those terms in the Renewal Franchise Agreement). Franchisor and Franchisee acknowledge that the Renewal Franchise Agreement is the successor to the Franchise Agreement between Franchisor and Franchisee dated as of *<>* (**the "Expiring Franchise Agreement"**), under which Franchisee has operated the Franchised Restaurant at the Approved Location during the Expiring Franchise Agreement's term. Franchisor and Franchisee are signing this Rider because the Expiring Franchise Agreement will expire shortly, and Franchisor has agreed to grant Franchisee a renewal franchise for the Franchised Restaurant by signing the Renewal Franchise Agreement. This Rider modifies certain provisions of the Renewal Franchise Agreement that do not apply to Franchisee's operation of the Franchised Restaurant during the renewal franchise term. 2. **Expiration of Expiring Franchise Agreement**. The Expiring Franchise Agreement's term expires on the day before the Effective Date. Franchisee has no further rights under the Expiring Franchise Agreement on or following the Effective Date. # 3. **Term**. (a) Section 2 of the Renewal Franchise Agreement is amended to read as follows: Source: Item 22 — CONTRACTS (FDD page 73)

Question 49

For California franchisees, what fees does the Department of Financial Protection and Innovation require Capriottis Sandwich Shop to defer?

Accepted Answer

The Department of Financial Protection and Innovation requires that we defer the collection of all initial fees from California franchisees until we have completed all of our pre-opening obligations and the CAPRIOTTI'S Restaurants are open for business. The payment of the Development Fee and initial franchise fee attributable to a specific CAPRIOTTI'S Restaurant is deferred until that Restaurant is open.

Source: Item 23 — RECEIPTS (FDD pages 73–303)

Question 50

For California franchisees who sign a Development Rights Agreement, when is the payment of the development and initial fees attributable to a specific Restaurant deferred for a Capriottis Sandwich Shop?

Accepted Answer

|  | The Department of Financial Protection and Innovation requires that we |
|---|---|
| defer the collection of all initial fees from California franchisees until we have |  |
| completed all of our pre-opening obligations and the CAPRIOTTI’S Restaurants |  |
| are open for business. The payment of the Development Fee and initial franchise |  |
| fee attributable to a specific CAPRIOTTI’S Restaurant is deferred until that |  |
| Restaurant is open. |  |

Source: Item 23 — RECEIPTS (FDD pages 73–303)

Question 51

Does the California Labor Code, specifically Part 4.5.5, potentially affect the minimum wages for Capriottis Sandwich Shop franchisees, and how?

Accepted Answer

rations Code sections 31512 and 31512.1) states that any provision of a franchise agreement or related document requiring the franchisee to waive specific provisions of the law is contrary to public policy and is void and unenforceable. The law also prohibits a franchisor from disclaiming or denying (i) representations it, its employees, or its agents make to you, (ii) your ability to rely on any representations it makes to you, or (iii) any violation of the law.
- 5. The following language is added to the end of Item 1 of the Franchise Disclosure Document:

Franchisees located in California are required to comply with all applicable California labor laws, including labor laws that may apply to certain fast food restaurant industry employees. Specifically, California franchisees operating certain fast food restaurants must comply with Part 4.5.5 (commencing with Section 1474) of Division 2 of the California Labor Code (codifying Assembly Bill

No. 1228) which established the California Fast Food Council ("CFFC") which has the authority to increase the hourly minimum wage subject to certain limitations, and to set forth requirements, limitations, and procedures for adopting and reviewing fast food restaurant health, safety, and employment standards in California.

6.

Source: Item 23 — RECEIPTS (FDD pages 73–303)

Question 52

Does the Capriotti's Sandwich Shop FDD include a state-specific rider to the Development Rights Agreement for use in California?

Accepted Answer

**THE FOLLOWING PAGES IN THIS EXHIBIT ARE STATE-SPECIFIC RIDERS TO THE DEVELOPMENT RIGHTS AGREEMENT**

# **RIDER TO THE CAPRIOTTI'S SANDWICH SHOP, INC. DEVELOPMENT RIGHTS AGREEMENT FOR USE IN CALIFORNIA**

---

The Department of Financial Protection and Innovation requires that we defer the collection of all initial fees from California franchisees until we have completed all of our pre-opening obligations and the CAPRIOTTI'S Restaurants are open for business. The payment of the Development Fee and initial franchise fee attributable to a specific CAPRIOTTI'S Restaurant is deferred until that Restaurant is open.

3. INCORPORATION OF OTHER TERMS. The following language is added to the end of Section 11 of the Development Rights Agreement:

This Agreement contains a covenant not to compete which extends beyond the termination of the franchise. A contract that restrains a former franchisee from engaging in a lawful trade or business is void to the extent provided under California Business and Professions Code Section 16600.

For franchisees operating outlets located in California, the California Franchise Investment Law and the California Franchise Relations Act will apply regardless of the choice of law or dispute resolution venue stated elsewhere. Any language in this Agreement or any amendment thereto or any agreement to the contrary is superseded by this condition.

Source: Item 23 — RECEIPTS (FDD pages 73–303)

Question 53

Does Capriotti's Sandwich Shop have any restrictions on establishing or franchising restaurants in Non-Traditional Venues within a franchisee's territory?

Accepted Answer

(b) If you (and your Approved Affiliates, as applicable) are fully complying with all of your (and their) obligations under this DRA, the First Franchise Agreement, and all other franchise agreements then in effect between us and you (and your Approved Affiliates, as applicable) for the construction, development, and operation of CAPRIOTTI'S Restaurants, then during this DRA's term only, we (and our affiliates) will not—except with respect to CAPRIOTTI'S Restaurants proposed to be located at or within Non-Traditional Venues or Restricted Venues (both defined below)—establish and operate, or grant to others the right to establish and operate, CAPRIOTTI'S Restaurants that have their physical locations within the Territory. We (and our affiliates) reserve the right without any restrictions whatsoever to pursue and establish, or franchise or license others to pursue and establish, CAPRIOTTI'S Restaurants to be located at or within Non-Traditional Venues and Restricted Venues having their physical locations within the Territory but only if you (or your Approved Affiliates) cannot or choose not to pursue the opportunity when it becomes available, no matter the reason for your (or your Approved Affiliate's) decision not to pursue the opportunity.

# A "Non-Traditional Venue" is defined in this DRA to mean:

- (i) a captive-venue location, including, without limitation, airports, hospitals or medical centers, limited-access highway food facilities, bus or train locations, entertainment and sports complexes, convention centers, military facilities, schools, colleges, and universities, office facilities, department and retail super-stores, off-site sales accounts, convenience stores, supermarkets, shopping malls, and home-improvement retailers; and
- (ii) any type of location known colloquially as a "virtual kitchen," a "ghost kitchen," a "ghost operation," or a similar type of location that operates on a delivery and/or pick-up-only basis.

A "Restricted Venue" is a physical location within Territory (which need not be a Non-Traditional Venue) for which that location's owner or manager sets financial, experience, or organizational standards for an acceptable operator that you (or your Approved Affiliate) do not and cannot satisfy when the opportunity becomes available.

Our, our affiliate's, or another franchisee's or licensee's establishment and operation of a CAPRIOTTI'S Restaurant at or within a Non-Traditional Venue or a Restricted Venue physically located in the Territory will not count toward your compliance with the Schedule. However, CAPRIOTTI'S Restaurants that you (or your Approved Affiliates) establish and operate at or within a Non-Traditional Venue physically located in the Territory will count toward your compliance with the Schedule.

Source: Item 23 — RECEIPTS (FDD pages 73–303)

Question 54

What could cause the development costs for a Capriottis Sandwich Shop to exceed the estimated range?

Accepted Answer

ange above. Although we expect all projects to fall within the indicated range, as we continue to expand into new and higher-cost markets, our experience with these costs could change significantly. Depending on the market in which you develop or the type of Restaurant you develop, you might experience costs exceeding the range listed in the table. Unpredictable and unknown fluctuations in costs due to supply-chain disruptions, supply shortages, inflation, transportation costs, and other economic factors on the national, regional, and local levels also could affect development costs. ¹⁰The high and low amounts represent the price to buy new equipment. This range includes the purchase of audio-visual equipment. ¹¹This represents the cost for the fully integrated required point-of-sale (POS) system with our required suite of services. The low end is representative of franchisees that have chosen to utilize the subscription program offered by the vendor. ¹²This represents the training cost for your first Restaurant. You do not pay an initial training fee, but you will pay all personal expenses for the training for you and your employees, including transportation to Las Vegas, lodging, meals, wages, and benefits for you and any of your employees during Pre-Opening Mock Operations. This amount is the estimated cost for 2 people to attend our training program. ¹³You must spend at least \$30,000 on New Shop Opening Plan marketing activities. The New Shop Opening Plan typically covers a 3 to 4-month period. We will make the spend on your behalf. Some franchisees have chosen to spend significantly more than \$30,000 towards their shop opening marketing and advertising activities. ¹⁴All restaurants must have at least 2 Pre-Opening Mock Operations and staff training events, commonly called friends and family nights. For the friends and family nights, we estimate food costs of \$2,500 and approximately 200 salary hours for 3 days of employee pre-opening training. ¹⁵You must purchase the insurance we specify, as described in Item 8. ¹⁶This is an estimate of the funds needed to cover your other pre-opening expenses as well as initial start-up expenses during the first 3 months of operation (other than the items identified separately in the table). Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 18–26)

Question 55

Can Capriottis Sandwich Shop change the Royalty Fee schedule to something other than monthly, bi-weekly, or weekly, and if so, under what conditions?

Accepted Answer

| Column 1       | Column 2      | Column 3                 | Column 4                        |
|----------------|---------------|--------------------------|---------------------------------|
| Type of Fee(1) | Amount        | Due Date                 | Remarks                         |
| Royalty Fee    | 6% to 7% of   | Currently payable the    | Upon 30 days' written notice,   |
|                | monthly Gross | 5th day after the end of | we may begin calculating the    |
|                | Sales(2,3)    | each calendar month      | Royalty Fee (a) bi-weekly as    |
|                |               | along with the Royalty   | of the 15th and the last day of |
|                |               | Fee report.              | each calendar month, in         |
|                |               |                          | which event the Due Date for    |
|                |               |                          | the Royalty Fee will be the     |
|                |               |                          | 5th day after the end of the    |
|                |               |                          | bi-weekly period, (b) weekly    |
|                |               |                          | on Monday for the preceding     |
|                |               |                          | 7 days, in which event the      |
|                |               |                          | Due Date for the Royalty Fee    |
|                |               |                          | will be the immediately         |
|                |               |                          | following Wednesday, or (c)     |
|                |               |                          | on such other schedule we       |
|                |               |                          | determine in our sole           |
|                |               |                          | judgment, including as          |
|                |               |                          | frequently as daily, in which

Source: Item 6 — OTHER FEES (FDD pages 13–18)

Question 56

Does the choice of law provision in the Capriotti's Sandwich Shop Franchise Agreement waive any rights under New York General Business Law Article 33?

Accepted Answer

The foregoing choice of law should not be considered a waiver of any right conferred upon the franchisor or upon the franchisee by Article 33 of the General Business Law of the State of New York.

Source: Item 23 — RECEIPTS (FDD pages 73–303)

Question 57

How might compliance with California Labor Code Part 4.5.5 increase the expenses and initial investment for a Capriottis Sandwich Shop franchise in California?

Accepted Answer

Compliance with Part 4.5.5 (commencing with Section 1474) of Division 2 of the California Labor Code (codifying Assembly Bill No. 1228) may increase your expenses (including increased wages) and the amount of your initial investment. You may review the Department of Industrial Relations website at Fast Food Minimum Wage Frequently Asked Questions (ca.gov) for further information and consult with an attorney specializing in labor law in determining any additional costs.

Source: Item 23 — RECEIPTS (FDD pages 73–303)

Question 58

What condition must Capriottis Sandwich Shop meet before the franchisee is obligated to pay the development fee?

Accepted Answer

Despite the payment provisions above, we will defer your payment of the development fee due under the Development Rights Agreement until we have fulfilled all of our initial obligations to you and you have opened your first CAPRIOTTI'S Restaurant for business. You must pay us the full development fee due under the Development Rights Agreement on the day you open your first CAPRIOTTI'S Restaurant for business.

Source: Item 23 — RECEIPTS (FDD pages 73–303)

Question 59

What conditions must a Capriottis Sandwich Shop franchisee meet to relocate their Franchised Restaurant?

Accepted Answer

trade secrets, recipes, designs, trademarks, trade names, logos, signs and slogans presently in use and/or developed after the date of this Agreement, all of which may be used by Franchisee only based on the terms of this Agreement; and

**WHEREAS**, Franchisee desires, upon the terms and conditions of this Agreement, to obtain and enter into the business of operating a restaurant utilizing the System at and from the location agreed upon in this Agreement, under the name "CAPRIOTTI'S SANDWICH SHOP," subject to the training of Franchisor and in accordance with the standards of Franchisor presently in existence and/or as changed or modified at any time after the date of this Agreement.

**NOW, THEREFORE, IN CONSIDERATION OF** the foregoing, the mutual agreements contained in this Agreement, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties, the parties hereby agree as follows:

1. **Grant of Franchise**. Franchisor hereby grants Franchisee during the term of this Agreement a non-assignable, non-exclusive right to use the Marks as designated and authorized by Franchisor, and the System, in the operation of a sandwich and specialty shop (the "Franchised Restaurant"). The Franchised Restaurant shall be limited to the designated location being specifically set forth in Section 3 of this Agreement or on the Site Selection Addendum (Exhibit A). Franchisee is hereby also granted the right to use the system of operation and method of doing business conceived and designated by Franchisor, and t

Source: Item 22 — CONTRACTS (FDD page 73)

Question 60

What conditions must be met for Capriottis Sandwich Shop to approve the transfer of franchise rights or a controlling ownership interest?

Accepted Answer

se disposition restrictions. Further, Franchisee expressly agrees that the existence of any claims it may have against Franchisor, whether or not arising from this Agreement, will not constitute a defense to the enforcement by Franchisor of Franchisee's lease disposition covenants.

- 12.3 **Conditions for Approval of Transfer**. If Franchisee (and its owners) is in full compliance with this Agreement, then, subject to this Section 12.3's other provisions:
  - (a) Franchisor will approve the transfer of a non-controlling ownership interest in Franchisee if the proposed transferee and its owners are of good moral character, have no interest in and do not perform services for (and have no affiliates with an interest in or performing services for) a Competitive Business, otherwise meet Franchisor's thenapplicable standards for non-controlling owners of CAPRIOTTI'S Restaurant franchisees, and sign Franchisor's then-current form of Franchise Guaranty Agreement. References to a "controlling ownership interest" in Franchisee or one of its owners (if an entity) mean the percent of voting shares or other voting rights resulting from dividing one hundred percent (100%) of the ownership interests by the number of owners. In the case of a proposed transfer of an ownership interest in Franchisee or one of its owners, whether a "controlling ownership interest" is involved must be determined both immediately before and immediately after the proposed transfer to see if a "controlling ownership interest" will be transferred (because of the number of owners before the proposed transfer) or will be deemed to have been transferred (because of the number of owners after the proposed transfer).
  - (b) If the proposed transfer is of the franchise rights granted by this Agreement or a controlling ownership interest in Franchisee or in an entity owning a controlling ownership interest in Franchisee, or is one of a series of transfers (regardless of the timeframe over which these transfers take place) in the aggregate transferring the franchise rights granted by this Agreement or a controlling ownership interest in Franchisee or in an entity owning a controlling ownership interest in Franchisee, then Franchisor will not unreasonably withhold its approval if all of the following mandatory conditions are met

(provided, however, there may be no such transfer until after the Franchised Restaurant has opened for business):

- (i) (a) the transferee has the necessary business experience, aptitude, and financial resources to operate the Franchised Restaurant, (b) the transferee otherwise is qualified under Franchisor's thenexisting standards for the approval of new franchisees or of existing franchisees interested in acquiring additional franchises (including the transferee and its affiliates are in substantial operational compliance, at the time of the application, under all other franchise agreements for CAPRIOTTI'S restaurants to which they then are parties with Franchisor), and (c) the transferee and its owners are not restricted by another agreement (whether or not with Franchisor) from purchasing the Franchised Restaurant or the ownership interest in Franchisee or the entity that owns a controlling ownership interest in Franchisee;
- (ii) Franchisee has paid all amounts owed to Franchisor and its affiliates, has submitted all required reports and statements, and is not in breach of any provision of this Agreement or another agreement with Franchisor or its affiliates relating to the Franchised Restaurant;

Source: Item 22 — CONTRACTS (FDD page 73)

Question 61

What is the dependency for paying the development fee for a Capriottis Sandwich Shop franchise?

Accepted Answer

Despite the payment provisions above, we will defer your payment of the development fee due under the Development Rights Agreement until we have fulfilled all of our initial obligations to you and you have opened your first CAPRIOTTI'S Restaurant for business. You must pay us the full development fee due under the Development Rights Agreement on the day you open your first CAPRIOTTI'S Restaurant for business.

Source: Item 23 — RECEIPTS (FDD pages 73–303)

Question 62

What is the due date for the Royalty Fee for Capriottis Sandwich Shop?

Accepted Answer

| Column 1       | Column 2      | Column 3                 | Column 4                        |
|----------------|---------------|--------------------------|---------------------------------|
| Type of Fee(1) | Amount        | Due Date                 | Remarks                         |
| Royalty Fee    | 6% to 7% of   | Currently payable the    | Upon 30 days' written notice,   |
|                | monthly Gross | 5th day after the end of | we may begin calculating the    |
|                | Sales(2,3)    | each calendar month      | Royalty Fee (a) bi-weekly as    |
|                |               | along with the Royalty   | of the 15th and the last day of |

Source: Item 6 — OTHER FEES (FDD pages 13–18)

Question 63

What is the due date for royalty fees if Capriottis Sandwich Shop switches to a bi-weekly payment schedule?

Accepted Answer

| Agreement, Franchisee shall provide to Franchisor the following:                                                                                                       |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4.1 |
| A one-time nonrefundable franchisee fee of dollars |
| (\$) (the "Initial Franchise Fee") to be paid simultaneously with the execution of this Agreement. |
| If this is a renewal franchise agreement, the renewal fee specified in Franchisee's expired Franchise |
| Agreement shall be paid in lieu of the Initial Franchise Fee. |
| 4.2 |
| A royalty equal to percent (%) of Franchisee's total Gross Sales ("Royalty |
| Fee"). The payment shall be due on the fifth (5th) day after the end of each calendar month following the                                                              |
| opening of the Franchised Restaurant ("Due Date"). Upon thirty (30) days' written notice, Franchisor can                                                               |
| commence calculating the Royalty Fee (a) bi-weekly as of the fifteenth (15th) and the last day of each                                                                 |
| calendar month, in which event the Due Date for the Royalty Fee shall be the fifth (5th) day after the end                                                             |
| of the bi-weekly period, (b) weekly on Monday for the preceding seven (7) days, in which event the Due                                                                 |
| Date for the Royalty Fee shall be the immediately following Wednesday, or (c) on such other schedule as                                                                |
| Franchisor determines in its sole judgment, including as frequently as daily, in which event the Due Date                                                              |
| for the Royalty Fee shall be the day and time Franchisor communicates to Franchisee. The Due Date, and                                                                 |
| any changes in the Due Date, will apply to all fees and other amounts payable under this Agreement on or                                                               |
| before the Due Date. In the event Franchisee's restaurant is closed without Franchisor's approval for one                                                              |
| (1) or more days ("Unauthorized Closure"), in addition to the Royalty Fee due from operations, Franchisee                                                              |
| shall remit a Royalty Fee equal to the product of the average Royalty Fee for the sixty (60) days immediately                                                          |
| preceding the date the Unapproved Closure occurred multiplied by the number of days of the Unauthorized                                                                |
| Closure. In this event, the Due Date for such payment shall be the then-applicable Due Date that Franchisor

Source: Item 22 — CONTRACTS (FDD page 73)

Question 64

What is the due date for royalty fees if Capriottis Sandwich Shop switches to a weekly payment schedule?

Accepted Answer

| Agreement, Franchisee shall provide to Franchisor the following:                                                                                                       |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4.1 |
| A one-time nonrefundable franchisee fee of dollars |
| (\$) (the "Initial Franchise Fee") to be paid simultaneously with the execution of this Agreement. |
| If this is a renewal franchise agreement, the renewal fee specified in Franchisee's expired Franchise |
| Agreement shall be paid in lieu of the Initial Franchise Fee. |
| 4.2 |
| A royalty equal to percent (%) of Franchisee's total Gross Sales ("Royalty |
| Fee"). The payment shall be due on the fifth (5th) day after the end of each calendar month following the                                                              |
| opening of the Franchised Restaurant ("Due Date"). Upon thirty (30) days' written notice, Franchisor can                                                               |
| commence calculating the Royalty Fee (a) bi-weekly as of the fifteenth (15th) and the last day of each                                                                 |
| calendar month, in which event the Due Date for the Royalty Fee shall be the fifth (5th) day after the end                                                             |
| of the bi-weekly period, (b) weekly on Monday for the preceding seven (7) days, in which event the Due                                                                 |
| Date for the Royalty Fee shall be the immediately following Wednesday, or (c) on such other schedule as                                                                |
| Franchisor determines in its sole judgment, including as frequently as daily, in which event the Due Date                                                              |
| for the Royalty Fee shall be the day and time Franchisor communicates to Franchisee. The Due Date, and                                                                 |
| any changes in the Due Date, will apply to all fees and other amounts payable under this Agreement on or                                                               |
| before the Due Date. In the event Franchisee's restaurant is closed without Franchisor's approval for one                                                              |
| (1) or more days ("Unauthorized Closure"), in addition to the Royalty Fee due from operations, Franchisee                                                              |
| shall remit a Royalty Fee equal to the product of the average Royalty Fee for the sixty (60) days immediately                                                          |
| preceding the date the Unapproved Closure occurred multiplied by the number of days of the Unauthorized                                                                |
| Closure. In this event, the Due Date for such payment shall be the then-applicable Due Date that Franchisor                                                            |

Source: Item 22 — CONTRACTS (FDD page 73)

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