Are royalties paid on discounts or couponing at Capriottis Sandwich Shop restaurants?
Capriottis_Sandwich_Shop Franchise · 2025 FDDAnswer from 2025 FDD Document
Royalty Fee: Two affiliate-owned Restaurants pay a Management Fee equal to a 6% Royalty Fee.
In this example, we take into account the payment of Royalty Fees for all 10 locations.
Royalties are not paid on discounts or couponing.
Our accounting system breaks up the 12 months into 13 separate 4-week accounting periods.
This table represents the Royalty Fee of 6%, which would be paid by a multi-unit developer under the terms of an Area Development Agreement or Development Rights Agreement (rather than the 7% Royalty Fee payable by a franchisee who operates a single Restaurant).
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 59–67)
What This Means (2025 FDD)
According to the 2025 Capriottis Sandwich Shop Franchise Disclosure Document, royalties are not paid on discounts or couponing. This is explicitly stated in Item 19, which discusses financial performance representations. For a franchisee, this means that the royalty fee, which is 7% for single-restaurant operators or 6% for multi-unit developers, is calculated on gross sales before any deductions for discounts or coupons.
This policy can be beneficial for franchisees as it encourages promotional activities to drive sales without increasing the royalty burden. Capriottis Sandwich Shop franchisees can offer discounts and coupons to attract customers, especially during slow periods, without having to pay a percentage of those discounted sales to the franchisor. This provides flexibility in managing local marketing strategies and responding to competitive pressures.
It is important to note that while royalties are not paid on discounts, Capriottis Sandwich Shop requires all transactions to be entered into the Information System at the full (non-discounted) retail price for purposes of calculating Gross Sales. Additionally, promotional discounts initiated by the franchisee must be formally requested and pre-approved in writing by Capriottis Sandwich Shop, and physical evidence of the promotion must be retained. This ensures that the franchisor maintains oversight of promotional activities and can accurately track sales data.
This practice aligns with common franchise industry standards, where franchisors often base royalty fees on gross sales to simplify accounting and ensure a consistent revenue stream. By excluding discounts and coupons from the royalty calculation, Capriottis Sandwich Shop provides an incentive for franchisees to engage in promotional activities that can benefit both the franchisee and the overall brand.