How does Capriottis Sandwich Shop monitor credit risk exposure?

According to the 2025 FDD, Capriotti's Sandwich Shop addresses credit risk related to its cash holdings. The company considers highly liquid investments with an original maturity of three months or less as cash equivalents. Capriotti's Sandwich Shop maintains its cash in bank deposit accounts, which at times may exceed federally insured limits.

However, the company states that it has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash. This suggests that Capriotti's Sandwich Shop management regularly monitors the financial health of the banks where they deposit cash and assesses the level of insurance coverage to mitigate potential losses.

For a prospective franchisee, this indicates that Capriotti's Sandwich Shop takes a conservative approach to managing its cash and actively monitors its banking relationships to minimize risk. While the FDD provides this information regarding cash, it does not detail how Capriotti's Sandwich Shop monitors credit risk exposure related to accounts and royalties receivable. A potential franchisee should inquire about the specific procedures Capriotti's Sandwich Shop uses to manage and mitigate credit risk associated with franchisee royalties and other receivables.