How will Capriottis Sandwich Shop pay the purchase price at closing?
Capriottis_Sandwich_Shop Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor will pay in full the purchase price at the closing or, at Franchisor's option, in twenty-four (24) equal monthly
installments, with interest at the rate equal to the prime lending rate as of the closing at Franchisor's primary bank. Franchisee must sign all documents of transfer reasonably necessary for purchase of the Franchised Restaurant by Franchisor or the third-party assignee, which documents shall include all customary representations and warranties from Franchisee as to ownership and condition of, and title to, the assets of the Franchised Restaurant being transferred. All assets must be transferred free and clear of all liens and encumbrances, with all sales and transfer taxes paid by Franchisee.
Source: Item 22 — CONTRACTS (FDD page 73)
What This Means (2025 FDD)
According to Capriottis Sandwich Shop's 2025 Franchise Disclosure Document, the method of payment for the purchase price at closing depends on whether the franchisor or a third-party assignee is purchasing the franchise. If Capriottis Sandwich Shop exercises its option to purchase a franchised restaurant, it will pay the full purchase price at the closing. Alternatively, Capriottis Sandwich Shop has the option to pay the purchase price in 24 equal monthly installments. If Capriottis Sandwich Shop chooses to pay in installments, interest will accrue at a rate equal to the prime lending rate as of the closing date at Capriottis Sandwich Shop's primary bank.
Regardless of whether Capriottis Sandwich Shop or a third-party assignee purchases the franchise, the franchisee is required to sign all necessary transfer documents. These documents must include customary representations and warranties from the franchisee regarding the ownership, condition, and title to the assets of the franchised restaurant being transferred. All assets must be transferred free and clear of all liens and encumbrances, with all sales and transfer taxes paid by the franchisee.
It is important for a prospective franchisee to understand these conditions, as they outline the financial and legal obligations during a transfer or repurchase scenario. Franchisees should ensure they maintain accurate records of asset ownership, condition, and any outstanding liens or taxes to facilitate a smooth transfer process. Additionally, understanding the potential for installment payments with interest can help franchisees plan their finances accordingly if Capriottis Sandwich Shop decides to repurchase the franchise.