According to Capriottis Sandwich Shop's 2025 Franchise Disclosure Document, certain notes payable to stockholders are secured by the company's assets. Specifically, the notes payable to stockholders, with interest rates ranging from 7.00% to 10% and due through January 2026, are collateralized by the Company's assets. The total value of these notes is listed as $953,827. Additionally, another set of notes payable to stockholders, with interest rates ranging from 8.00% to 12.00% and due through February 2026, are also collateralized by the Company's assets, with a total value of $2,500,000.

This means that if Capriottis Sandwich Shop defaults on these notes, the stockholders have a legal claim to the Company's assets up to the value of the outstanding debt. These assets could include equipment, inventory, accounts receivable, or even real estate owned by the company. The fact that these notes are collateralized provides the stockholders with a higher level of security compared to unsecured debt, as they have a direct claim on specific assets in the event of default.

For a prospective Capriottis Sandwich Shop franchisee, this information is relevant because it provides insight into the company's debt structure and financial obligations. While it is common for businesses to have debt, understanding the terms of that debt, including the collateral securing it, can help franchisees assess the financial stability and risk profile of the franchisor. High levels of secured debt could indicate a higher risk of financial distress if the company's performance declines.

It's important to note that the FDD also lists other notes payable to various entities, some of which are also collateralized by the Company's assets. For example, a note payable to John Fogarty Living Trust is collateralized by the Company's assets and guaranteed by certain stockholders. Similarly, a note payable to Zeus Holdings, LLC is collateralized by the assets of Capriotti's Silverado, LLC. A potential franchisee should carefully review all of the notes payable and their corresponding collateral to gain a comprehensive understanding of Capriottis Sandwich Shop's financial obligations and the security interests held by its creditors.