Why are initial fees and payments deferred for a Capriottis Sandwich Shop franchise?
Capriottis_Sandwich_Shop Franchise · 2025 FDDAnswer from 2025 FDD Document
ority 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.
- The following language is added to the "Remarks" column of the line-item titled "Interest" in Item 6 of the Franchise Disclosure Document:
The highest interest rate allowed under California law is 10% annually.
- The following language is added as the last paragraphs of Items 5 and 7 of the Franchise Disclosure Document:
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 your Restaurant is open for business. For California franchisees who sign a Development Rights Agreement, the payment of the development and initial fees attributable to a specific Restaurant is deferred until that Restaurant is open.
- The following language is added to the end of Item 7 of the Franchise Disclosure Document:
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.
- The following paragraphs are added to the end of Item 17 of the Franchise Disclosure Document:
California Law Regarding Termination and Nonrenewal. California Business and Professions Code Sections 20000 through 20043 provide rights to franchisees concerning transfer, termination, or non-renewal of a franchise. If the Franchise Agreement contains a provision that is inconsistent with the law, then the law will control.
Post-Termination Noncompetition Covenants.
Source: Item 23 — RECEIPTS (FDD pages 73–303)
What This Means (2025 FDD)
According to the 2025 Capriottis Sandwich Shop Franchise Disclosure Document, the reasons for deferring initial fees and payments vary by state. In California, the Department of Financial Protection and Innovation mandates that Capriottis Sandwich Shop defer the collection of all initial fees from franchisees until all pre-opening obligations are fulfilled and the restaurant is open for business. This means the payment of both the Development Fee and the initial franchise fee for a specific Capriottis Sandwich Shop location is postponed until that restaurant commences operations.
Similarly, in Maryland, the Maryland Securities Commissioner requires a financial assurance based on Capriottis Sandwich Shop's financial condition. As a result, all initial fees and payments owed by franchisees in Maryland are deferred until Capriottis Sandwich Shop completes its pre-opening obligations under the Franchise Agreement and the restaurant is open. This deferral also applies to development fees and initial payments by area developers in Maryland, which are deferred until the first Capriottis Sandwich Shop restaurant is opened.
In addition to state-specific regulations, Capriottis Sandwich Shop also voluntarily defers initial fees in certain states. For example, in Illinois, North Dakota, and Minnesota, Capriottis Sandwich Shop defers the payment of the initial franchise fee until all initial obligations to the franchisee are fulfilled and the restaurant is open for business. The initial franchise fee must be paid on the day the restaurant opens. This deferral also applies to the development fee under the Development Rights Agreement, which is deferred until the first Capriottis Sandwich Shop restaurant is opened. This approach may reduce the initial financial burden on new franchisees, aligning payment with the commencement of business operations.