Does a Capriottis Sandwich Shop franchisee have any territorial protection?
Capriottis_Sandwich_Shop Franchise · 2025 FDDAnswer from 2025 FDD Document
- 3.2 Franchisee acknowledges that the franchise is nonexclusive, Franchisee has no territorial protection whatsoever, and Franchisor and its affiliates retain all rights with respect to CAPRIOTTI'S Restaurants, the Marks, the offer and sale of products and services that are similar to, competitive with, or dissimilar from the products and services the Franchised Restaurant offers and sells, and any other activities they deem appropriate, whenever and wherever Franchisor and its affiliates desire,
without regard to the competitive impact on the Franchised Restaurant. Franchisor and Franchisee agree that Franchisor's and its affiliates' rights will be as broad as possible. Specifically, but without limitation, Franchisor and its affiliates reserve the following rights:
Source: Item 22 — CONTRACTS (FDD page 73)
What This Means (2025 FDD)
According to the 2025 Capriottis Sandwich Shop Franchise Disclosure Document, franchisees are not granted territorial protection. The franchise agreement explicitly states that the franchise is nonexclusive, meaning Capriottis Sandwich Shop retains all rights regarding CAPRIOTTI'S Restaurants, trademarks, and the offer and sale of similar or competitive products and services, without any territorial restrictions. This allows Capriottis Sandwich Shop and its affiliates to operate wherever they deem appropriate, regardless of the potential impact on a franchisee's business.
This lack of territorial protection means that Capriottis Sandwich Shop can establish new franchises or operate company-owned stores in the same area as an existing franchise, potentially leading to direct competition. Franchisees have no recourse to prevent such actions, as the agreement explicitly acknowledges and accepts this risk. This is a significant consideration for prospective franchisees, as it introduces a level of uncertainty regarding market saturation and potential revenue dilution.
While Capriottis Sandwich Shop does not offer territorial protection during the franchise term, it does include a restrictive covenant that applies after the termination or expiration of the franchise agreement. This covenant prevents the franchisee and their immediate family from engaging in a Competitive Business within a specified area. Specifically, they cannot have an interest in or perform services for a Competitive Business located at the Franchised Restaurant's site, within five miles of that site, or within three miles of another Capriottis Sandwich Shop restaurant in operation or under construction. This restriction lasts for a certain period after the agreement ends, offering some limited protection to existing Capriottis Sandwich Shop locations from former franchisees opening competing businesses in close proximity.