Potbelly_Sandwich_Works 2025 Franchise FAQ - FDD Ninja

Question 1

What representations and warranties does the Purchaser make to the Seller in the Potbelly Sandwich Works agreement?

Accepted Answer

o Purchaser, Guarantor or any of their respective assets.

- Section 5.05 Financial Capabilities. On the date hereof Purchaser has, and on the Closing Date Purchaser will have, sufficient funds to pay the Closing Amount and the IFF due at the Closing in accordance with Section 2.05.
- Section 5.06 Brokers and Finders. Neither Purchaser nor Guarantor nor any of their respective Representatives has taken any action with respect to any broker or finder that would give rise to any liability on the part of Seller or incurred any liability for any brokerage fees, commissions or finder's fees in connection with the transactions contemplated by this Agreement or the agreements contemplated hereby that would give rise to any liability on the part of Seller.
- Section 5.07 Consents and Approvals. Except for registrations and approvals required in order for Purchaser to conduct business at the Shops following the Effective Time, no consent, approval or authorization of, or declaration, filing or registration with, any Governmental Authority is required by Purchaser or Guarantor in connection with the execution, delivery and performance of this Agreement or the other Transaction Agreements or the consummation of the transactions contemplated hereby and thereby. Purchaser holds (or at the Closing will hold) all sales tax certificates of authority and other tax registration and certificates required to collect and remit sales tax in connection with the operation of the Shops.
- Section 5.08 Seller Disclosure. Neither Purchaser nor Guarantor has received or relied upon any representation, warranty or guarantee, whether oral or written or express or implied, as to the potential value, volume, profits or success of the Business or any Shop. Purchaser and Guarantor have previously received a copy of Potbelly Franchising, LLC's current Franchise Documents, including all related disclosures, with Acknowledgment of Receipt attached thereto and have signed, dated and delivered to Potbelly Franchising, LLC such Acknowledgment of Receipt.
- Section 5.09 Knowledge. To the Knowledge of Purchaser, there are no facts or circumstances relating to Purchaser or Guarantor that would materially adversely affect the ability of Purchaser or Guarantor to perform their respective obligations under this Agreement or the other Transaction Agreements.

## ARTICLE VI.

## COVENANTS OF THE PARTIES

## Section 6.01 Inspection; Condition of Assets.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 2

What is the total estimated initial investment range to open a Potbelly Sandwich Works franchise?

Accepted Answer

| Type of Expenditure | Low Amount | High Amount | Method of Payment | When Due | To Whom Payment is Made |
|---|---|---|---|---|---|
| Initial Franchise Fee (1) | $20,000 | $40,000 | Lump Sum | Upon signing the Franchise Agreement | Us |
| Rental of Premises | $17,400 | $27,549 | As Agreed | As Incurred | Third Parties |
| (3 months) (2) |  |  |  |  |  |
| Architectural Fees | $13,500 | $57,560 | As Agreed | As Incurred | Third Parties and/or PSW, LLC |
| Construction (3) | $450,000 | $570,000 | As Agreed | As Incurred | Third Parties |
| Signage (4) | $3,526 | $75,000 | As Agreed | As Incurred | Third Parties |
| Furniture, Fixtures | $97,000 | $180,085 | As Agreed | As Incurred | Third Parties and |
| & Equipment (5) |  |  |  |  | PSW, LLC |
| Smallwares | $11,000 | $45,000 | As Agreed | As Incurred | Third Parties and PSW, LLC |
| Technology (6) | $8,000 | $54,665 | As Agreed | As Incurred | Third Parties |
| Training Expenses | $4,000 | $50,000 | As Agreed | As Incurred | Third Parties |
| (7) |  |  |  |  |  |
| Insurance (12 | $4,000 | $9,240 | As Agreed | As Incurred | Third Parties |
| months) (8) |  |  |  |  |  |
| Professional Fees | $10,000 | $20,000 | As Agreed | As Incurred | Third Parties |
| (9) |  |  |  |  |  |
| Business Licenses | $795 | $5,000 | As Agreed | As Incurred | Third Parties |
| & Permits (10) |  |  |  |  |  |
| Office Equipment | $1,000 | $5,000 | As Agreed | As Incurred | Third Parties |
| & Supplies (11) |  |  |  |  |  |
| Market Introduction Program (12) | $10,000 | $15,000 | As Agreed | As Incurred | Third Parties or PSW, LLC |
| Opening Inventory | $3,698 | $20,000 | As Agreed | As Incurred | Third Parties |
| (13) |  |  |  |  |  |
| Type of | Low Amount | High Amount | Method of | When Due | To Whom |
| Expenditure |  |  | Payment |  | Payment is Made |
| Additional | $100 | $100,000 | As Agreed | As Incurred | Third Parties |
| Funds (3 months) |  |  |  |  |  |
| (14) |  |  |  |  |  |
| Total | $654,019 | $1,274,099 |  |  |  |

Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 25–28)

Question 3

What is the total number of Potbelly Sandwich Works franchise agreements signed but outlets not yet opened, as listed in the table?

Accepted Answer

|
| Kentucky | 0                      | 1                     | 0                         |
| Maryland | 0                      | 1                     | 0                         |

| Column 1       | Column 2               | Column 3              | Column 4                  |
|----------------|------------------------|-----------------------|---------------------------|
|                |                        |                       |                           |
|                |                        |                       |                           |
|                | Franchise Agreements   | Projected New         | Projected New Company     |
|                | Signed But Outlets Not | Franchised Outlets In | Owned Outlets In The Next |
| State          | Opened                 | The Next Fiscal Year  | Fiscal Year               |
| Michigan       | 0                      | 0                     | 1                         |
| Mississippi    | 0                      | 1                     | 0                         |
| New York       | 0                      | 1                     | 0                         |
| North Carolina | 2                      | 3                     | 0                         |
| Ohio           | 0                      | 2                     | 1                         |
| South Carolina | 1                      | 2                     | 0                         |
| Texas          | 0                      | 1                     | 1                         |
| Utah           | 1                      | 2                     | 0                         |
| Washington     | 0                      | 0                     | 1                         |
| Total          | 9                      | 26                    | 8                         |

Exhibit J-1 lists our franchisees and Area Developers and the addresses and telephone numbers of their Potbelly Shops as of December 29, 2024. Exhibit J-2 lists the names, city and state, and current business telephone numbers (or, if unknown, the last known home telephone or other contact numbers) of the franchisees who had outlets terminated, canceled, or not renewed, or who otherwise voluntarily or involuntarily ceased to do business under a Franchise Agreement, from January 1, 2024 to December 31, 2024, or who did not communicate with us within 10 weeks of this disclosure document's original issuance date. This list includes franchisees that transferred their Potbelly Shops to third parties. If you buy this franchise, your contact information may be disclosed to other buyers when you leave the franchise system.

During the last 3 fiscal years, no current or former franchisees have signed confidentiality clauses restricting them from discussing with you their experiences as a franchisee in our franchise system. There are no trademark-specific franchisee organizations associated with the Potbelly franchise system.

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 70–78)

Question 4

What was the total number of Potbelly Sandwich Works outlets that closed in 2023?

Accepted Answer

tus of Company-Owned Outlets For years 2022 to 2024

| Col. 1 State | Col. 2 Year | Col. 3 Outlets at Start of the Year | Col. 4 Outlets Opened | Col. 5 Outlets Reacquired From Franchisee | Col. 6 Outlets Closed | Col. 7 Outlets Sold to Franchisee | Col. 8 Outlets at End of the Year |
|---|---|---|---|---|---|---|---|
| Arizona | 2022 | 10 | 0 | 0 | 0 | 0 | 10 |
|  | 2023 | 10 | 0 | 0 | 0 | 0 | 10 |
|  | 2024 | 10 | 0 | 0 | 0 | 0 | 10 |
| Colorado | 2022 | 10 | 0 | 0 | 0 | 0 | 10 |
|  | 2023 | 10 | 0 | 0 | 0 | 0 | 10 |
|  | 2024 | 10 | 0 | 0 | 0 | 0 | 10 |
| District of | 2022 | 22 | 0 | 0 | 1 | 0 | 21 |
| Columbia |  |  |  |  |  |  |  |
|  | 2023 | 21 | 0 | 0 | 0 | 0 | 21 |
|  | 2024 | 21 | 1 | 0 | 1 | 0 | 21 |
| Illinois | 2022 | 111 | 0 | 0 | 2 | 0 | 109 |
|  | 2023 | 109 | 1 | 0 | 2 | 0 | 108 |
|  | 2024 | 108 | 1 | 0 | 0 | 0 | 109 |
| Indiana | 2022 | 9 | 0 | 0 | 0 | 0 | 9 |
|  | 2023 | 9 | 0 | 0 | 0 | 0 | 9 |
|  | 2024 | 9 | 0 | 0 | 0 | 0 | 9 |
| Kansas | 2022 | 3 | 0 | 0 | 0 | 0 | 3 |
|  | 2023 | 3 | 0 | 0 | 0 | 0 | 3 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 70–78)

Question 5

What was the total number of Potbelly Sandwich Works outlets at the start of 2022?

Accepted Answer

| Outlet Type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---| 
| Franchised | 2022 | 46 | 45 | -1 |
|  | 2023 | 45 | 79 | +34 |
|  | 2024 | 79 | 95 | +16 |
| Column 1 Outlet Type | Column 2 Year | Column 3 Outlets at the Start of the Year | Column 4 Outlets at the End of the Year | Column 5 Net Change |
|---|---|---|---|---| 
| Company- Owned | 2022 | 397 | 384 | -13 |
|  | 2023 | 384 | 345 | -39 |
|  | 2024 | 345 | 346 | +1 |
| Total Outlets | 2022 | 443 | 429 | -14 |
|  | 2023 | 429 | 424 | -5 |
|  | 2024 | 424 | 441 | +17 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 70–78)

Question 6

How does the initial franchise fee for Potbelly Sandwich Works, as detailed in Item 5, relate to the estimated initial investment range provided in Item 7?

Accepted Answer

| Type of Expenditure | Low Amount | High Amount | Method of Payment | When Due | To Whom Payment is Made |
|---|---|---|---|---|---|
| Initial Franchise Fee (1) | $20,000 | $40,000 | Lump Sum | Upon signing the Franchise Agreement | Us |

Question 7

How does the Potbelly Sandwich Works's initial franchise fee (Item 5) compare to the total estimated initial investment (Item 7), and what percentage does it represent?

Accepted Answer

| Type of Expenditure | Low Amount | High Amount | Method of Payment | When Due | To Whom Payment is Made |
|---|---|---|---|---|---|
| Initial Franchise Fee (1) | $20,000 | $40,000 | Lump Sum | Upon signing the Franchise Agreement | Us |
| Rental of Premises | $17,400 | $27,549 | As Agreed | As Incurred | Third Parties |
| (3 months) (2) |  |  |  |  |  |
| Architectural Fees | $13,500 | $57,560 | As Agreed | As Incurred | Third Parties and/or PSW, LLC |
| Construction (3) | $450,000 | $570,000 | As Agreed | As Incurred | Third Parties |
| Signage (4) | $3,526 | $75,000 | As Agreed | As Incurred | Third Parties |
| Furniture, Fixtures | $97,000 | $180,085 | As Agreed | As Incurred | Third Parties and |
| & Equipment (5) |  |  |  |  | PSW, LLC |
| Smallwares | $11,000 | $45,000 | As Agreed | As Incurred | Third Parties and PSW, LLC |
| Technology (6) | $8,000 | $54,665 | As Agreed | As Incurred | Third Parties |
| Training Expenses | $4,000 | $50,000 | As Agreed | As Incurred | Third Parties |
| (7) |  |  |  |  |  |
| Insurance (12 | $4,000 | $9,240 | As Agreed | As Incurred | Third Parties |
| months) (8) |  |  |  |  |  |
| Professional Fees | $10,000 | $20,000 | As Agreed | As Incurred | Third Parties |
| (9) |  |  |  |  |  |
| Business Licenses | $795 | $5,000 | As Agreed | As Incurred | Third Parties |
| & Permits (10) |  |  |  |  |  |
| Office Equipment | $1,000 | $5,000 | As Agreed | As Incurred | Third Parties |
| & Supplies (11) |  |  |  |  |  |
| Market Introduction Program (12) | $10,000 | $15,000 | As Agreed | As Incurred | Third Parties or PSW, LLC |
| Opening Inventory | $3,698 | $20,000 | As Agreed | As Incurred | Third Parties |
| (13) |  |  |  |  |  |
| Type of | Low Amount | High Amount | Method of | When Due | To Whom |
| Expenditure |  |  | Payment |  | Payment is Made |
| Additional | $100 | $100,000 | As Agreed | As Incurred | Third Parties |
| Funds (3 months) |  |  |  |  |  |
| (14) |  |  |  |  |  |
| Total | $654,019 | $1,274,099 |  |  |  |

Question 8

How does the Potbelly Sandwich Works's initial franchise fee (Item 5) compare to the total estimated initial investment (Item 7), and what percentage does it represent, considering both the low and high estimates?

Accepted Answer

| Type of Expenditure | Low Amount | High Amount | Method of Payment | When Due | To Whom Payment is Made |
|---|---|---|---|---|---|
| Initial Franchise Fee (1) | $20,000 | $40,000 | Lump Sum | Upon signing the Franchise Agreement | Us |
| Rental of Premises | $17,400 | $27,549 | As Agreed | As Incurred | Third Parties |
| (3 months) (2) |  |  |  |  |  |
| Architectural Fees | $13,500 | $57,560 | As Agreed | As Incurred | Third Parties and/or PSW, LLC |
| Construction (3) | $450,000 | $570,000 | As Agreed | As Incurred | Third Parties |
| Signage (4) | $3,526 | $75,000 | As Agreed | As Incurred | Third Parties |
| Furniture, Fixtures | $97,000 | $180,085 | As Agreed | As Incurred | Third Parties and |
| & Equipment (5) |  |  |  |  | PSW, LLC |
| Smallwares | $11,000 | $45,000 | As Agreed | As Incurred | Third Parties and PSW, LLC |
| Technology (6) | $8,000 | $54,665 | As Agreed | As Incurred | Third Parties |
| Training Expenses | $4,000 | $50,000 | As Agreed | As Incurred | Third Parties |
| (7) |  |  |  |  |  |
| Insurance (12 | $4,000 | $9,240 | As Agreed | As Incurred | Third Parties |
| months) (8) |  |  |  |  |  |
| Professional Fees | $10,000 | $20,000 | As Agreed | As Incurred | Third Parties |
| (9) |  |  |  |  |  |
| Business Licenses | $795 | $5,000 | As Agreed | As Incurred | Third Parties |
| & Permits (10) |  |  |  |  |  |
| Office Equipment | $1,000 | $5,000 | As Agreed | As Incurred | Third Parties |
| & Supplies (11) |  |  |  |  |  |
| Market Introduction Program (12) | $10,000 | $15,000 | As Agreed | As Incurred | Third Parties or PSW, LLC |
| Opening Inventory | $3,698 | $20,000 | As Agreed | As Incurred | Third Parties |
| (13) |  |  |  |  |  |
| Type of | Low Amount | High Amount | Method of | When Due | To Whom |
| Expenditure |  |  | Payment |  | Payment is Made |
| Additional | $100 | $100,000 | As Agreed | As Incurred | Third Parties |
| Funds (3 months) |  |  |  |  |  |
| (14) |  |  |  |  |  |
| Total | $654,019 | $1,274,099 |  |  |  |## Explanatory Notes

- 1. Initial Franchise Fee The initial franchise fee is \$40,000. No separate initial investment is required when you sign the SDAA. You need only pay the development fee, which equals the full \$40,000 initial franchise fee for the first Potbelly Shop covered by the Franchise Agreement to which the SDAA is attached, plus a \$20,000 deposit for each additional Potbelly Shop to be developed. If you are eligible to participate in the 50/50 Incentive Program, then for any Potbelly Shop you open early or on time in the calendar years 2025 and 2026 under the SDAA, we will reduce your initial franchise fee for that Potbelly Shop by 50% making the initial franchise fee due for that Shop \$20,000.

Question 9

How does the Potbelly Sandwich Works's initial franchise fee (Item 5) compare to the total estimated initial investment (Item 7), and what percentage does it represent, considering the potential for cost overruns?

Accepted Answer

| Type of Expenditure | Low Amount | High Amount | Method of Payment | When Due | To Whom Payment is Made |
|---|---|---|---|---|---|
| Initial Franchise Fee (1) | $20,000 | $40,000 | Lump Sum | Upon signing the Franchise Agreement | Us |
| Rental of Premises | $17,400 | $27,549 | As Agreed | As Incurred | Third Parties |
| (3 months) (2) |  |  |  |  |  |
| Architectural Fees | $13,500 | $57,560 | As Agreed | As Incurred | Third Parties and/or PSW, LLC |
| Construction (3) | $450,000 | $570,000 | As Agreed | As Incurred | Third Parties |
| Signage (4) | $3,526 | $75,000 | As Agreed | As Incurred | Third Parties |
| Furniture, Fixtures | $97,000 | $180,085 | As Agreed | As Incurred | Third Parties and |
| & Equipment (5) |  |  |  |  | PSW, LLC |
| Smallwares | $11,000 | $45,000 | As Agreed | As Incurred | Third Parties and PSW, LLC |
| Technology (6) | $8,000 | $54,665 | As Agreed | As Incurred | Third Parties |
| Training Expenses | $4,000 | $50,000 | As Agreed | As Incurred | Third Parties |
| (7) |  |  |  |  |  |
| Insurance (12 | $4,000 | $9,240 | As Agreed | As Incurred | Third Parties |
| months) (8) |  |  |  |  |  |
| Professional Fees | $10,000 | $20,000 | As Agreed | As Incurred | Third Parties |
| (9) |  |  |  |  |  |
| Business Licenses | $795 | $5,000 | As Agreed | As Incurred | Third Parties |
| & Permits (10) |  |  |  |  |  |
| Office Equipment | $1,000 | $5,000 | As Agreed | As Incurred | Third Parties |
| & Supplies (11) |  |  |  |  |  |
| Market Introduction Program (12) | $10,000 | $15,000 | As Agreed | As Incurred | Third Parties or PSW, LLC |
| Opening Inventory | $3,698 | $20,000 | As Agreed | As Incurred | Third Parties |
| (13) |  |  |  |  |  |
| Type of | Low Amount | High Amount | Method of | When Due | To Whom |
| Expenditure |  |  | Payment |  | Payment is Made |
| Additional | $100 | $100,000 | As Agreed | As Incurred | Third Parties |
| Funds (3 months) |  |  |  |  |  |
| (14) |  |  |  |  |  |
| Total | $654,019 | $1,274,099 |  |  |  |## Explanatory Notes

- 1. Initial Franchise Fee The initial franchise fee is \$40,000. No separate initial investment is required when you sign the SDAA. You need only pay the development fee, which equals the full \$40,000 initial franchise fee for the first Potbelly Shop covered by the Franchise Agreement to which the SDAA is attached, plus a \$20,000 deposit for each additional Potbelly Shop to be developed. If you are eligible to participate in the 50/50 Incentive Program, then for any Potbelly Shop you open early or on time in the calendar years 2025 and 2026 under the SDAA, we will reduce your initial franchise fee for that Potbelly Shop by 50% making the initial franchise fee due for that Shop \$20,000. If you are eligible to participate in the LAD Incentive Program, then for any Potbelly Shop you open early before the required shop opening date under the development schedule in the SDAA, we will reduce your initial franchise fee for that Potbelly Shop by 50% making the initial franchise fee due for that Shop \$20,000.
- 2.

Question 10

How many shares of preferred stock were designated for Potbelly Sandwich Works as of December 29, 2024 and December 31, 2023?

Accepted Answer

ue data)**

|                                                                                                                                                                         | December 29, 2024 |    | December 31, 2023 |  |  |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------|----|----------------------|--|--|
| Assets                                                                                                                                                                  |                      |    |                      |  |  |
| Current assets                                                                                                                                                          |                      |    |                      |  |  |
| Cash and cash equivalents                                                                                                                                               | \$ 11,663         | \$ | 33,788               |  |  |
| Accounts receivable, net of allowances of \$22 and \$26 as of December 29, 2024 and December 31, | 9,765 |  | 7,960 |  |  |
| 2023, respectively |  |  |  |  |  |
| Inventories                                                                                                                                                             | 3,744                |    | 3,516                |  |  |
| Prepaid expenses and other current assets                                                                                                                               | 7,882                |    | 7,828                |  |  |
| Assets classified as held-for-sale                                                                                                                                      | 147                  |    | —                    |  |  |
| Total current assets                                                                                                                                                    | \$ 33,201         | \$ | 53,092               |  |  |
| Property and equipment, net                                                                                                                                             | 50,533               |    | 45,087               |  |  |
| Right-of-use assets for operating leases                                                                                                                                | 133,207              |    | 144,390              |  |  |
| Indefinite-lived intangible assets                                                                                                                                      | 3,404                |    | 3,404                |  |  |
| Goodwill                                                                                                                                                                | 2,049                |    | 2,056                |  |  |
| Restricted cash                                                                                                                                                         | 815                  |    | 749                  |  |  |
| Deferred tax assets                                                                                                                                                     | 33,816               |    | —                    |  |  |
| Deferred expenses, net and other assets                                                                                                                                 | 6,121                |    | 3,681                |  |  |
| Total assets                                                                                                                                                            | \$ 263,146        | \$ | 252,460              |  |  |
|                                                                                                                                                                         |                      |    |                      |  |  |
| Liabilities and equity                                                                                                                                                  |                      |    |                      |  |  |
| Current liabilities                                                                                                                                                     |                      |    |                      |  |  |
| Accounts payable                                                                                                                                                        | \$ 9,552          | \$ | 9,927                |  |  |
| Accrued expenses                                                                                                                                                        | 32,872               |    | 35,377               |  |  |
| Short-term operating lease liabilities                                                                                                                                  | 22,809               |    | 24,525               |  |  |
| Current portion of long-term debt                                                                                                                                       | —                    |    | 1,250                |  |  |
| Total current liabilities                                                                                                                                               | 65,233               |    | 71,078               |  |  |
| Long-term debt, net of current portion                                                                                                                                  | 4,000                |    | 19,168               |  |  |
| Long-term operating lease liabilities                                                                                                                                   | 127,929              |    | 142,050              |  |  |
| Other long-term liabilities                                                                                                                                             | 8,036                |    | 6,070                |  |  |
| Total liabilities                                                                                                                                                       | 205,198              |    | 238,367              |  |  |
| Commitments and contingencies (Note 14)                                                                                                                                 |                      |    |                      |  |  |
|                                                                                                                                                                         |                      |    |                      |  |  |
| Equity | 398 |  | 389 |  |  |
| Common stock, \$0.01 par value—authorized 200,000 shares; outstanding 29,893 and 29,364 shares as of |  |  |  |  |  |
| December 29, 2024 and December 31, 2023, respectively |  |  |  |  |  |
| Warrants                                                                                                                                                                | 1,745                |    | 2,219                |  |  |
| Additional paid-in-capital                                                                                                                                              | 470,085              |    | 462,583              |  |  |
| Treasury stock, held at cost, 10,445 and 10,077 shares as of December 29, 2024, and December 31, | (120,338) |  | (116,701) |  |  |
| 2023, respectively |  |  |  |  |  |
| Accumulated deficit                                                                                                                                                     | (293,503)            |    | (333,797)            |  |  |
| Total stockholde

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 37–49)

Question 11

What services does Potbelly Sandwich Works, as a franchisor, provide to franchisees that are similar to those provided to affiliate-owned shops?

Accepted Answer

Our franchise program for Potbelly Shops is structured to provide to franchisees, in our capacity as franchisor, some of the services that our affiliates provide to the affiliate-owned Potbelly Shops identified below. However, we do not provide certain services to franchisees that the business owner normally provides, such as financing, accounting, legal, personnel, and management services. The availability, cost, and quality of these services to a franchisee likely will affect operations.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 66–70)

Question 12

According to the addendum, under what circumstances will the additional disclosures for Potbelly Sandwich Works not apply?

Accepted Answer

The following are additional disclosures for the Franchise Disclosure Document of Potbelly Franchising, LLC required by various state franchise laws. Each provision of these additional disclosures will not apply unless, with respect to that provision, the jurisdictional requirements of the applicable state franchise registration and disclosure law are met independently without reference to these additional disclosures.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 13

According to the Potbelly Sandwich Works agreement, what must be true for 'Fraud' to be deemed to exist?

Accepted Answer

No statement, questionnaire or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or any other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 14

According to the Potbelly Sandwich Works franchise agreement, what happens to the payment obligations if the agreement is terminated?

Accepted Answer

## A. PAYMENT OF AMOUNTS OWED TO US.

- (1) You agree to pay us within fifteen (15) days after this Agreement expires or is terminated, or on any later date we determine the amounts due to us, the Royalties, Brand Fund contributions, late fees and interest, and other amounts owed to us (and our affiliates) that then are unpaid.

If we terminate this Agreement on any ground specified under Section 14.B., or if you terminate this Agreement without cause, before the Term's scheduled expiration date, you also will be liable to us for lost future royalties to which we would have been entitled, but for the termination, had you operated for the remaining portion of the Term in compliance with this Agreement.

- (2) If this Agreement is terminated before its Term expires pursuant to Subsections 14.B, 14.D, or 14.E above, then you acknowledge and confirm that we will suffer and incur substantial damages because this Agreement did not continue for the Term's full length.

Accordingly, you agree to pay us for all damages, costs, expenses, attorneys' and experts' fees directly or indirectly related thereto, including, without limitation, lost Royalties, lost Brand Fund contributions, lost profits, loss of goodwill and damage to our Marks and reputation, lost opportunities, travel and personnel costs, expenses that we may incur in developing or finding another franchisee to develop a new Potbelly Shop at the site, and any other lost payments or benefits we would have received for the balance of the Term after the effective date of termination (collectively, "Brand Damages").

You further acknowledge and agree that your obligation to pay Brand Damages resulting from early termination shall be in addition to (not in lieu of) your posttermination obligations to pay other amounts due as of the date of termination (as contemplated under the preceding Subsection (1) above) and to otherwise comply with the entirety of Section 14 hereof, and that the Brand Damages shall not be deemed a penalty for early termination but instead reasonable compensation to us for your failure to perform under this Agreement during the remainder of the Term.

- (3) Your foregoing payment obligations arising under Subsections (1) and (2) above will give rise to, and remain until paid in full, a lien in our favor: (i) against any and all assets, property, furnishings, equipment, signs, fixtures and inventory owned by you or the Shop at the time of termination or expiration; and (ii) against any payment obligation you may allege we have to you, any of your money we are holding, or any other amounts of yours which are otherwise in our possession on or after the effective date of termination or expiration.

Our rights and your obligations under this Subsection shall survive termination or expiration of this Agreement until they are satisfied or later expire by their terms.

Source: Item 22 — CONTRACTS (FDD page 79)

Question 15

According to Michigan law, how many business days before the execution of any binding franchise agreement or payment of consideration must Potbelly Sandwich Works provide the Franchise Disclosure Document?

Accepted Answer

Michigan requires that we give you this disclosure document at least 10 business days before the execution of any binding franchise or other agreement or the payment of any consideration, whichever occurs first.

Source: Item 22 — CONTRACTS (FDD page 79)

Question 16

According to New York law, when must Potbelly Sandwich Works provide the Franchise Disclosure Document?

Accepted Answer

New York requires that we give you this disclosure document at the earlier of the first personal meeting or 10 business days before the execution of the franchise or other agreement or the payment of any consideration that relates to the franchise relationship.

Source: Item 22 — CONTRACTS (FDD page 79)

Question 17

According to North Dakota law, where must Potbelly Sandwich Works and the franchisee arbitrate disputes, unless preempted by the Federal Arbitration Act?

Accepted Answer

We and you must arbitrate all disputes at location near our principal business address at the time the arbitration demand is filed (it currently is in Chicago, Illinois); however, to the extent required by the North Dakota Franchise Investment Law (unless such a requirement is preempted by the Federal Arbitration Act), arbitration proceedings will be held at a site to which we and you agree.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 18

According to the Potbelly Sandwich Works Principal's Agreement, under what condition does Section 17.C., captioned "Costs and Attorneys' Fees," apply to the undersigned?

Accepted Answer

- 2. Each of the undersigned Principals individually agrees that:
- (a) he or she will be personally bound by the following sections of the Franchise Agreement, whether the obligations described in those sections are imposed upon the Entity, its owners, or both, as if he or she were the Franchisee under the Franchise Agreement: Sections 4.C.; 5; 6; 7; 9.E. and F; 12 (if the undersigned Principal is an owner of the Entity); 13.C. (if the undersigned Principal is an owner of the Entity); 15.B., C, and D; 16.B.; 17.A., B, F, G, H, I, J, and K; and 19. Section 17.C., captioned "Costs and Attorneys' Fees," will apply to the undersigned but only to the extent that the undersigned fails to comply with any of the obligations referenced above;

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 19

According to the purchase agreement for Potbelly Sandwich Works, what happens if the seller's representations and warranties are not true, complete, and accurate in all material respects as of the closing date?

Accepted Answer

Each and every obligation of Purchaser under this Agreement to be performed at the Closing shall be subject to the satisfaction, on or before the Closing Date, of each of the following conditions, unless waived in writing by Purchaser at its sole discretion:

- Section 9.01 Representations and Warranties True. The representations and warranties of Seller contained herein shall, taken as a whole, be true, complete and accurate in all material respects as of the date of this Agreement and at and as of the Closing Date as though such representations and warranties were made at and as of such date (other than representations and warranties made as of another stated date, which representations and warranties shall have been true, complete and accurate in all material respects as of such date).

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 20

According to the Rider, what aspects of the relationship between Potbelly Sandwich Works and the franchisee might be superseded by RCW 19.100.180?

Accepted Answer

RCW 19.100.180 may supersede provisions in the SDAA or related agreements concerning your relationship with us, including in the areas of termination and renewal of your franchise. There may also be court decisions that supersede the SDAA or related agreements concerning your relationship with us. Provisions in the SDAA, including those summarized in Item 17 of the Franchise Disclosure Document, are subject to state law.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 21

According to the Rider to the Potbelly Sandwich Works Franchise Agreement for use in Washington, what happens in the event of a conflict of laws?

Accepted Answer

In the event of a conflict of laws, the provisions of the Washington Franchise Investment Protection Act, chapter 19.100 RCW will prevail.

RCW 19.100.180 may supersede provisions in the Franchise Agreement or related agreements concerning your relationship with us, including in the areas of termination and renewal of your franchise. There may also be court decisions that supersede the Franchise Agreement or related agreements concerning your relationship with us. Provisions in the Franchise Agreement, including those summarized in Item 17 of the Franchise Disclosure Document, are subject to state law.

In any arbitration or mediation involving a franchise purchased in Washington, the arbitration or mediation site will be either in the state of Washington, or in a place mutually agreed upon at the time of the arbitration or mediation, or as determined by the arbitrator or mediator at the time of arbitration or mediation. In addition, if litigation is not precluded by the Franchise Agreement, you may bring an action or proceeding arising out of or in connection with the sale of franchises, or a violation of the Washington Franchise Investment Protection Act, in Washington.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 22

According to the Rider to the Potbelly Sandwich Works Shop Development Area Agreement for use in North Dakota, where will arbitration proceedings be held if required by the North Dakota Franchise Investment Law?

Accepted Answer

However, to the extent required by the North Dakota Franchise Investment Law (unless such a requirement is preempted by the Federal Arbitration Act), arbitration proceedings will be held at a site to which we and you agree.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 23

According to the Rider to the Potbelly Sandwich Works Shop Development Area Agreement for use in North Dakota, under what condition can an action be brought in North Dakota?

Accepted Answer

RANCHISING, LLC FRANCHISE AGREEMENT FOR USE IN NEW YORK

| This Rider (the "Rider") is made and entered in

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 24

According to the Rider to the Potbelly Sandwich Works Shop Development Area Agreement for use in Washington, what are the conditions that necessitate the signing of the Rider?

Accepted Answer

This Rider (the "Rider") is made and entered into as of the day of, 20 (the "Effective Date") (regardless of the dates of the parties' signatures) by and between POTBELLY FRANCHISING, LLC, an Illinois limited liability company with its principal business address at 500 West Madison Street, Suite 1000, Chicago, Illinois 60661 ("we," "us," or "our"), and , whose principal business address is ("you" or "your"). 1. Background. We and you are parties to that certain Shop Development Area Agreement dated, 20 that has been signed at the same time as this Rider (the "SDAA"). This Rider is annexed to and forms part of the SDAA. This Rider is being signed because (a) you are a resident of the State of Washington and/or (b) the Development Area will be located in the State of Washington and/or (c) any of the offering or sales activity relating to the SDAA occurred in the State of Washington.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 25

According to the Rider, are there court decisions that might supersede the Potbelly Sandwich Works Franchise Agreement?

Accepted Answer

RCW 19.100.180 may supersede provisions in the SDAA or related agreements concerning your relationship with us, including in the areas of termination and renewal of your franchise. There may also be court decisions that supersede the SDAA or related agreements concerning your relationship with us. Provisions in the SDAA, including those summarized in Item 17 of the Franchise Disclosure Document, are subject to state law.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 26

According to the Rider, what are the two conditions under which this Rider is signed for a Potbelly Sandwich Works franchise?

Accepted Answer

| This Rider (the "Rider") is made and entered into as of the day of, 20 (the "Effective Date") (regardless of the dates of the parties' signatures) by and between POTBELLY FRANCHISING, LLC, an Illinois limited liability company with its principal business address at 500 West Madison Street, Suite 1000, Chicago, Illinois 60661 ("we," "us," or "our"), and , whose principal business address is ("you" or "your"). |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1. |
| Background. We and you are parties to that certain Franchise Agreement dated |
| , 20 that has been signed at the same time as this Rider (the "Franchise |
| Agreement"). This Rider is annexed to and forms part of the Franchise Agreement. This Rider is being |
| signed because (a) you are a resident of North Dakota and the Potbelly Shop that you will operate under |
| the Franchise Agreement will be located in North Dakota, and/or (b) any of the franchise offering or sales |
| activity occurred in North Dakota. |

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 27

According to section 8.03, what happens to the restrictions on Potbelly Sandwich Works or its affiliates under Section 2 if the size of the Development Area is reduced?

Accepted Answer

- 8.03 Alternative Remedy Upon Default. In addition to, and without limiting, our other rights and remedies under this SDAA, any other agreement or applicable law, upon the occurrence of any event giving rise to our right to terminate this SDAA under the preceding Subsections 8.01 and 8.02, we may instead elect, at our sole option and upon delivering providing you written notice, to (1) operate or grant franchises to operate Potbelly Shops within the Development Area, in which case the restrictions on us or our Affiliates under Section 2 above will not apply to the Development Area; (2) grant you an extension under the Development Schedule for such time period and for a nonrefundable extension fee equal to the balance of the Initial Franchise Fees for the number of Potbelly Shops remaining to be opened under the Development Schedule; and/or (3) temporarily or permanently reduce the size of the Development Area, in which case the restrictions on us or our Affiliates under Section 2 above will not apply in any geographic area removed from the preceding territorial boundaries.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 28

According to the Shop Development Area Agreement (SDAA) Rider, where will arbitration proceedings be held if required by the North Dakota Franchise Investment Law for a Potbelly Sandwich Works franchise?

Accepted Answer

We and you must arbitrate all disputes at location near our principal business address at the time the arbitration demand is filed (it currently is in Chicago, Illinois); however, to the extent required by the North Dakota Franchise Investment Law (unless such a requirement is preempted by the Federal Arbitration Act), arbitration proceedings will be held at a site to which we and you agree.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 29

What action must a Potbelly Sandwich Works franchisee take if an item does not qualify as a 'work made-for-hire'?

Accepted Answer

All ideas, concepts, techniques, and materials relating to a Potbelly Shop, whether or not protectable intellectual property and whether created by or for you or your owners or Shop employees, must be promptly disclosed to us and will be deemed to be our and our affiliates' sole and exclusive property, part of the Franchise System, and works made-for-hire for us and our affiliates. To the extent any item does not qualify as a "work made-for-hire" for us and our affiliates, by this paragraph you assign ownership of and all related rights to that item to us and our affiliates, hereby waive all moral rights in that item, and hereby agree to take whatever action (including signing assignment or other documents) we request to evidence our and our affiliates' ownership or to help us and our affiliates obtain intellectual property rights in the item.

Source: Item 14 — PATENTS, COPYRIGHTS, AND PROPRIETARY INFORMATION (FDD pages 54–55)

Question 30

How does the amendment to Section 8.A of the Potbelly Sandwich Works Franchise Agreement affect the days and hours of operation for a Potbelly Shop at a Non-Traditional Location?

Accepted Answer

8. Compliance With System Standards. Section 8.A of the Franchise Agreement is amended as follows:
  - (a) Days and Hours of Operation. We recognize and acknowledge that the Potbelly Shop will operate at a Non-Traditional Location and will be required to be open and operating on those days and during those hours that the Non-Traditional Location may set from time to time. Therefore, Subsection 8.A(13) of the Franchise Agreement is deleted.

Source: Item 22 — CONTRACTS (FDD page 79)

Question 31

Where will the arbitration or mediation site be located for a Potbelly Sandwich Works franchise purchased in Washington?

Accepted Answer

In any arbitration or mediation involving a franchise purchased in Washington, the arbitration or mediation site will be either in the state of Washington, or in a place mutually agreed upon at the time of the arbitration or mediation, or as determined by the arbitrator or mediator at the time of arbitration or mediation. In addition, if litigation is not precluded by the SDAA, a franchisee may bring an action or proceeding arising out of or in connection with the sale of franchises, or a violation of the Washington Franchise Investment Protection Act, in Washington.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 32

Where will arbitration proceedings be held according to the Rider to the Potbelly Sandwich Works Franchise Agreement, as it relates to the North Dakota Franchise Investment Law?

Accepted Answer

5. Arbitration. The following language is added to the end of Section 17.F. of the Franchise Agreement:

However, to the extent required by the North Dakota Franchise Investment Law (unless such a requirement is preempted by the Federal Arbitration Act), arbitration proceedings will be held at a site to which we and you agree.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 33

Can Potbelly Sandwich Works assume the lease for the remainder of the term, including renewal options?

Accepted Answer

dress items and other property from the Premises.

- 5. If Potbelly receives notice of a default by Franchisee under the Lease or if Potbelly notifies Landlord of the expiration or termination of the Franchise Agreement, Potbelly shall have the right and option, upon written notice to Landlord, to undertake the steps set forth in this Section herein, provided that Potbelly must exercise such right by giving written notice to Landlord within sixty (60) days after the earlier to occur of (a) Potbelly's receipt of a default notice from Landlord or (b) Potbelly's notification to Landlord that the Franchise Agreement has been terminated. Upon giving Landlord such notice, Potbelly may: (i) undertake to perform the terms, covenants, obligations, and conditions of the Lease on behalf of Franchisee (notwithstanding any removal or eviction of Franchisee) for a period not to exceed six (6) months from the first date of any cure or notice by Potbelly; or (b) at any time within or at the conclusion of such six (6) month period, assume the terms, covenants, obligations, and conditions of the Lease for the remainder of the term, together with any applicable renewal options. In the event of such an assumption by Potbelly, Potbelly shall cure any defaults of the Franchisee that predated the date of the assumption so that the Lease is brought current In such event, Landlord and Potbelly shall enter into an agreement, in a commercially reasonable form satisfactory to both parties, to document such assumption. Potbelly is not a party to and shall have no liability under the Lease unless and until said Lease is assigned to, and assumed by, Potbelly as herein provided.
- 6. As used herein, an ''Acceptable Franchisee" shall mean a franchisee that has a tangible net worth equal to or greater than Five Hundred Thousand Dollars (\$500,000.00) and has been through any Franchisor training program.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 34

Besides RCW 19.100.180, what else might supersede the Potbelly Sandwich Works Franchise Agreement or related agreements?

Accepted Answer

f Potbelly Franchising, LLC shall be modified as follows:

RCW 19.100.180 may supersede provisions in the franchise agreement or related agreements concerning your relationship with the franchisor, including in the areas of termination and renewal of your franchise. There may also be court decisions that supersede the franchise agreement or related agreements concerning your relationship with the franchisor. Franchise agreement provisions, including those summarized in Item 17 of the Franchise Disclosure Document, are subject to state law.

In any arbitration or mediation involving a franchise purchased in Washington, the arbitration or mediation site will be either in the state of Washington, or in a place mutually agreed upon at the time of the arbitration or mediation, or as determined by the arbitrator or mediator at the time of arbitration or mediation. In addition, if litigation is not precluded by the franchise agreement, a franchisee

may bring an action or proceeding arising out of or in connection with the sale of franchises, or a violation of the Washington Act, in Washington.

In the event of a conflict of laws, the provisions of the Washington Act, chapter 19.100 RCW will prevail.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 35

What is the condition regarding franchise approval that must be met before the purchaser is obligated to close the agreement with Potbelly Sandwich Works?

Accepted Answer

- Section 9.04 Franchise Approval. Potbelly Franchising, LLC shall have granted to Purchaser the franchise rights to operate the Shops.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 36

What is the condition regarding injunctions that must be met before the purchaser is obligated to close the agreement with Potbelly Sandwich Works?

Accepted Answer

- Section 9.03 No Injunction, Etc. On the Closing Date, (a) there shall be no effective Order of any nature issued or threatened by a court or other Governmental Authority of competent jurisdiction directing that any of the transactions provided for herein may not be consummated as so provided or imposing any conditions on the consummation of the transactions contemplated hereby, and (b) no Action shall be pending before any such court or other Governmental Authority seeking such relief.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 37

Does the 'CONDITIONAL ASSIGNMENT OF TELEPHONE NU' contract impose any obligations on Potbelly Sandwich Works franchisees?

Accepted Answer

[Item 22: CONTRACTS]

EXHIBIT A – LISTING OF OWNERSHIP INTERESTS EXHIBIT B – CONDITIONAL ASSIGNMENT OF TELEPHONE NUMBER(S)

GUARANTY AND ASSUMPTION OF OBLIGATIONS

## POTBELLY FRANCHISING, LLC FRANCHISE AGREEMENT

Source: Item 22 — CONTRACTS (FDD page 79)

Question 38

What conditions allow Potbelly Franchising, LLC to take possession of the leased premises and expel the Assignor from a Potbelly Sandwich Works location?

Accepted Answer

Upon Assignor's default under the Lease or under the franchise agreement for a "Potbelly Shop" between Assignee and Assignor (the "Franchise Agreement"), or if Assignor defaults under any document or instrument securing the Franchise Agreement, or if the Franchise Agreement expires or is terminated, Assignee has the right to take possession of the leased premises and expel Assignor from the premises. In that event, Assignor will have no further right and title to or interest in the Lease and will remain liable to Assignee for all past due rents that

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 39

What conditions must be met regarding 'Representations and Warranties True' for the obligations of the seller in the Potbelly Sandwich Works agreement, as outlined in Section 8.01?

Accepted Answer

Each and every obligation of Seller under this Agreement to be performed at the Closing shall be subject to the satisfaction, on or before the Closing Date, of each of the following conditions, unless waived in writing by Seller at its sole discretion.

Section 8.01 Representations and Warranties True. The representations and warranties of Purchaser and Guarantor contained herein shall, taken as a whole, be true, complete and accurate in all material respects as of the date of this Agreement and at and as of the Closing Date as though such representations and warranties were made at and as of such date (other than representations and warranties made as of another stated date, which representations and warranties shall have been true, complete and accurate in all material respects as of such date).

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 40

What is the consequence if the purchaser fails to notify the seller of title defects five business days prior to closing for a Potbelly Sandwich Works shop?

Accepted Answer

o correct the title defect shall not exceed Five Thousand

Dollars (\$5,000.00). If Purchaser fails to notify Seller of any claimed title defects by the date set forth above, Purchaser shall be deemed to have approved title. Purchaser shall pay the cost of all searches, title examinations, and title opinions. Purchaser shall have no rights under this Section 6.01(c) unless the amount required to correct the defect with respect to any particular parcel of Leased Real Property, as reasonably determined by Seller, equals or exceeds Five Thousand Dollars (\$5,000.00), and then only to the extent that Seller does not exercise its op

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 41

What is the consequence if the purchaser fails to provide written notice of deficiencies within two business days of inspecting a Potbelly Sandwich Works shop?

Accepted Answer

presentatives' entry into the Shops as provided herein.

- (b) In the event that, upon Purchaser's inspection of any Shop, Purchaser determines that there is any material deficiency with respect to the operating condition of the Assets located at such Shop, Purchaser shall provide written notice of the alleged deficiencies to Seller within two (2) Business Days of the date of such inspection. If Seller reasonably determines upon its receipt of such a written notice that the aggregate costs of repairing or replacing the deficient Assets that are located at a particular Shop identified by Purchaser in such written notice would equal or exceed Five Thousand Dollars (\$5,000.00), Seller shall, in its sole discretion, (i) agree to either repair or replace any such deficient Assets, in which case Purchaser shall cooperate with Seller in such repair or replacement, (ii) reduce the Purchase Price to be paid by Purchaser by the reasonable cost of repairing or replacing such deficient Assets, as estimated by Seller, or (iii) terminate t

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 42

In the context of arbitration or mediation for a Potbelly Sandwich Works franchise in Washington, can the location be determined at the time of the arbitration or mediation?

Accepted Answer

Franchise Disclosure Document, are subject to state law.

In any arbitration or mediation involving a franchise purchased in Washington, the arbitration or mediation site will be either in the state of Washington, or in a place mutually agreed upon at the time of the arbitration or mediation, or as determined by the arbitrator or mediator at the time of arbitration or mediation. In addition, if litigation is not precluded by the franchise agreement, a franchisee

may bring an action or proceeding arising out of or in connection with the sale of franchises, or a violation of the Washington Act, in Washington.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 43

What is the daily fee charged by Potbelly Sandwich Works for operating a shop without approval, and when is this fee due?

Accepted Answer

| Column 1                     | Column 2                                                                                                                         | Column 3                                    | Column 4                                                                                                                                                            |
|------------------------------|----------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Type of fee1                 | Amount                                                                                                                           | Due Date                                    | Remarks                                                                                                                                                             |
| Audit                        | Cost of inspection or audit (amount of which depends on circumstances and extent of your non compliance) | 15 days after billing                    | Due if you do not give us reports, supporting records, or other required information or understate required Royalties or other amounts by more than 2%. |
| Late Fee                     | \$100                                                                                                                            | May be auto debited from your account | Due for each late or dishonored payment.                                                                                                                         |
| Interest                     | Lesser of 1.5% per month or highest commercial contract interest rate law allows                                  | May be auto debited from your account | Due on all overdue amounts more than 7 days late.                                                                                                                |
| Non-Approved Shop Opening | \$5,000 for each day your Shop operates without our approval                                                         | May be auto debited from your account | Due if you begin operating Shop before we give our approval.                                                                                                     |
| Management Fee            | Manager's then-current daily salary plus direct expenses                                                             | As incurred                                 | Due when we (or a third party) manage Shop after Managing Owner's death or disability or after your default or abandonment.                                |
| Costs and Attorneys' Fees | Will vary under circumstances and depend on nature of your non-compliance                                            | As incurred                                 | Due when we incur costs and expenses to enforce Franchise Agreement against you, whether or not we begin formal legal proceeding.                          |
| Indemnification              | Will vary under circumstances and depend on nature of third party claim                                              | As incurred                                 | You must reimburse us if we are held liable for claims from your Shop's operation or incur costs to defend them (when we are not at fault).                |

Source: Item 6 — OTHER FEES (FDD pages 17–24)

Question 44

What is the dependency between compliance with the SDAA and the granting of franchises for Potbelly Sandwich Works shops?

Accepted Answer

- 2.03 Development Rights. During the Term, and provided you and your Affiliates are in compliance with this SDAA and all other agreements with us or any of our Affiliates (including franchise agreements signed pursuant to this SDAA), then we will:
- (a) grant to you, in accordance with Section 3, at least that cumulative number of franchises for Potbelly Shops set forth in Exhibit B, all of which are to be located within the geographical area described in Exhibit A (the "Development Area" or "Area"); and
- (b) neither operate (directly or through an Affiliate), nor grant any third party the right to operate, any Potbelly Shop located within the Development Area, except for:

- (1) Potbelly Shops you will develop pursuant to this SDAA for which you or your Affiliate will sign future franchise agreements for each such location;

- (2) Potbelly Shops already open (or under commitment to open) as of the Effective Date;

- (3) Potbelly Shops or other restaurants using any part or all of the Branded System and/or Marks at "Non-Traditional Venues" within the Development Area, such as hospitals or medical centers, airports, public or private schools, universities or college campuses, airport terminals, train or bus stations, convention centers, exhibition halls, amusement parks, fairgrounds, sports arenas, military bases, state or national parks, hotels, lodges, country clubs, social clubs, resorts, casinos, theaters, food trucks, or any other similar site or venue that generates customer flow that is independent from the general customer traffic flow of the surrounding area (collectively, "Non-Traditional Venues");

- (4) restaurants that we purchase (or as to which we purchase the rights as franchisor) that are part of another franchise system or chain, regardless of whether such restaurants are converted to operate using any of the Marks and/or any or all of the Branded System or whether such restaurants operate under other trademarks, service marks or trade dress and/or use other operating systems;

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 45

What is the dependency for Potbelly Sandwich Works to grant franchises according to the cumulative number set forth in Exhibit B?

Accepted Answer

We will grant franchises to you for the operation of that cumulative number of Potbelly Shops set forth in Exhibit B and located within the Development Area, subject to the following conditions:
- (1) You must submit to us, in accordance with procedures we establish from time to time, a complete application for a franchise and site application form for each site for a Potbelly Shop that you propose to develop and operate and that you in good faith believe to conform to our then current standard site selection

criteria for Potbelly Shops. Such site application shall include a description of each proposed site, including a summary of traffic patterns; parking; character of neighborhood; competition from, proximity to, and nature of other businesses, along with a letter of intent or other evidence confirming your favorable prospects for obtaining the proposed site.

- (2) We will accept or reject each site for which you submit to us complete applications in accordance with Section 3.02(1) and, if we accept such site, we will do so by delivering our standard franchise site package.

Our site acceptance letter, duly executed by us, is the exclusive means by which we accept a proposed site, and no other direct or indirect representation, approval or acceptance, whether in writing or verbally, by any of our officers, employees or agents, shall be effective or bind us.

We will use all reasonable efforts to make a site acceptance decision and, if the site is accepted, deliver a site acceptance letter to you, within 30 days after we acknowledge receipt of the complete site report and any other materials we have requested.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 46

Can Potbelly Sandwich Works direct a franchisee to stop using copyrighted items?

Accepted Answer

We and PSW, LLC claim copyrights in the Operations Manual (which contains our trade secrets and confidential information), Shop blueprints and other design features, advertising and marketing materials, menu boards, and similar items used in operating Potbelly Shops. We and PSW, LLC have not registered these copyrights with the United States Copyright Office but currently need not do so to protect them. You may use these items only as we specify while operating your Shop (and must stop using them if we so direct you).

Source: Item 14 — PATENTS, COPYRIGHTS, AND PROPRIETARY INFORMATION (FDD pages 54–55)

Question 47

Does the 'Effective Date' of the Rider to the Potbelly Sandwich Works Franchise Agreement depend on the dates of the parties' signatures?

Accepted Answer

This Rider (the "Rider") is made and entered into as of the day of, 20 (the "Effective Date") (regardless of the dates of the parties' signatures) by and between POTBELLY FRANCHISING, LLC, an Illinois limited liability company with its principal business address at 500 West Madison Street, Suite 1000, Chicago, Illinois 60661 ("we," "us," or "our"), and , whose principal business address is ("you" or "your").

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 48

In the event that Potbelly Sandwich Works defaults on its obligations, what protection does Exhibit G-2 offer?

Accepted Answer

Exhibit G-1 contains the audited consolidated balance sheets of Potbelly Corporation as of December 29, 2024, and December 31, 2023, and related consolidated statements of operations, statements of equity and statements of cash flows for the years ended December 29, 2024, December 31, 2023, and December 25, 2022. Potbelly Corporation absolutely and unconditionally guarantees to assume our duties and obligations under the Franchise Agreement should we become unable to perform our duties and obligations under the Franchise Agreement. Potbelly Corporation's Guarantee of Performance is attached as Exhibit G-2.

## EXHIBIT G-2

## GUARANTEE OF PERFORMANCE

## **GUARANTY OF PERFORMANCE**

For value received, Potbelly Corporation, located at 500 West Madison Street, Suite 1000, Chicago, IL 60661 (the "Guarantor"), absolutely and unconditionally guarantees to assume the duties of Potbelly Franchising, LLC, located at 500 West Madison Street, Suite 1000, Chicago, IL 60661 (the "Franchisor") under its franchise registration in each state where its franchise is registered or exempt from registration, as applicable, and under its Franchise Agreement as identified in its 2025 Franchise Disclosure Document, as it may be amended, and as that Franchise Agreement may be entered into with franchisees and amended, modified or extended, from time to time. This guaranty continues until all such obligations of the Franchisor under the franchise registration or franchise exemption (as applicable) and Franchise Agreement are satisfied or until liability of the Franchisor under the Franchise Agreement has been completely discharged, whichever first occurs. Guarantor is not discharged from liability if a claim by the franchisee against the Franchisor remains outstanding. Notice of acceptance is waived. The Guarantor does not waive receipt of notice of default on the part of the Franchisor. This guarantee is binding on the Guarantor and on its successors and assigns.

The Guarantor signs this guarantee at Chicago, Illinois on the 30th day of April, 2025.

Guarantor:

POTBELLY CORPORATION

By: __Adiya Dixon_________________

Title: _Senior Vice President, Chief Legal Officer, Chief Compliance Officer, General

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 78)

Question 49

During the first year of operation, is a Potbelly Sandwich Works franchisee required to use a specific outsourced accounting service?

Accepted Answer

In order to assure consistency and reliability with respect to the various forms of financial reporting you must make to us, you agree to establish and maintain at your own expense a bookkeeping, accounting, and recordkeeping system conforming to the requirements and formats we require from time to time. The records and information contained in this system will not include any records or information relating to Shop employees, as you control exclusively your labor relations and employment practices. During the Shop's first year of operation, you must use an outsourced accounting service we specify to ensure your preparation of required reports and financial statements accurately and in our desired format. If, after that first year, you choose to use an accounting firm that we have not specified, that firm must accept electronic files prepared in accordance with our Franchise Data Exchange documentation. If you do not comply with our accounting, recordkeeping, and reporting obligations any time after the Shop's first year of operation, we once again may require you to use a specified outsourced accounting service. You must use a Computer System to maintain sales data and other information and to generate the reports we require. You agree to give us in the manner and format we periodically prescribe:

- (a) weekly reports of the Shop's Total Revenue, discounts, net sales, product mix, transaction count, average ticket, and productivity;
- (b) within fifteen (15) days after the end of each fiscal month or other accounting period, the operating statements, unaudited financial statements, statistical reports, and other information we request regarding you and the Shop covering the previous fiscal month or other accounting period and the fiscal year-to-date;
- (c) within forty-five (45) days after the end of each fiscal year, annual profit and loss and source and use of funds statements and a balance sheet for the Shop as of the end of that fiscal year (all unaudited);
- (d) within forty-five (45) days after the end of each fiscal year, an annual budget for the current fiscal year; and
- (e) within fifteen (15) days after our request, exact copies of federal and state income tax returns, sales tax returns, purchase records, and other forms, records, books, and information we periodically require regarding the Shop and the Franchise (other than employee records for Shop employees, as you control exclusively your labor relations and employment practices).

Source: Item 22 — CONTRACTS (FDD page 79)

Question 50

For the Potbelly Sandwich Works franchise, does the Rider to the Shop Development Area Agreement waive claims under state franchise law, including fraud in the inducement, in Maryland?

Accepted Answer

s added as a new Section 17.P of the Franchise Agreement:

All representations requiring you to assent to a release, estoppel or waiver of liability are not intended to nor shall they act as a release, estoppel or waiver of any liability incurred under the Maryland Franchise Registration and Disclosure Law.

9. No Waiver of Disclaimer of Reliance. The following provision is added to the Franchise Agreement:

No statement, questionnaire or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or any other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 51

What must a Potbelly Sandwich Works franchisee comply with for PSW, LLC's benefit if PSW, LLC's license to the franchisor expires or is terminated?

Accepted Answer

If PSW, LLC's license to us expires or is terminated, your rights under the Franchise Agreement will not be affected. You will have the right to operate your Shop during the remaining franchise term, and any permitted successor franchise agreement term, if you comply for PSW, LLC's benefit with all of your obligations.

Source: Item 13 — TRADEMARKS (FDD pages 51–54)

Question 52

Can a Potbelly Sandwich Works franchisee obtain items from any supplier, and if so, under what conditions?

Accepted Answer

To maintain the quality of the Products that Potbelly Shops sell and our system's reputation, we may condition your right to buy or lease Operating Assets, inventory and other items, and services (besides those described above that you may obtain only from us, our affiliates and/or other specified exclusive sources) on their meeting our minimum standards and specifications and/or being acquired from suppliers we approve. We will issue and modify standards and specifications based on our, our affiliates', and our franchisees' experience in operating Potbelly Shops. Standards and specifications may impose minimum requirements for production, performance, reputation, prices, quality, design, and appearance. Our Operations Manual or other communications will identify our standards and specifications for you and (where appropriate) suppliers or only for suppliers (in the latter case where, for example, we give our standards and/or specifications to a supplier under a confidentiality agreement). There might be situations where you can obtain items from any supplier who can satisfy our requirements and, therefore, would be an approved supplier.

System Standards may cover terms and conditions of the sale and delivery of, and terms and methods of payment for, Potbelly Trade Secret Products, Potbelly Branded Products, and other items and services you obtain from us and affiliated and unaffiliated suppliers. This includes our and our affiliates' right to establish an electronic product ordering system and require your payment electronically before we prepare for shipment and send you Potbelly Trade Secret Products, Potbelly Branded Products, and other items you order. We and our affiliates have the right not to sell you any Potbelly Trade Secret Products, Potbelly Branded Products, or other items and not to provide you with services, or to do so only on a "cash-on-delivery" or other basis, if you are in default (but have not cured the default when required after written notice). You may not use any unapproved products as replacements.

## Approved Suppliers

In the case of Potbelly Trade Secret Products and Potbelly Branded Products, suppliers will be limited to us, our affiliates and/or other specified exclusive sources, meaning that you must buy

those items during the franchise term only from us, our affiliates and/or the other specified exclusive sources at the prices we or they decide to charge. We restrict these items' sources to protect trade secrets and other intellectual property rights, assure quality, assure a reliable supply of products meeting our standards, achieve better terms of purchase and delivery service, control usage of the Marks by third parties, and monitor the manufacture, packaging, processing, and sale of these items.

In the case of Operating Assets, services, and items other than Potbelly Trade Secret Products and Potbelly Branded Products, suppliers may at our option be limited to us, our affiliates and/or other specified exclusive sources, in which case you must (at our direction) buy those Operating Assets, other items, and services (including gift, loyalty, rewards, and affinity card processing services, quality assurance services, music network services, "mystery" and "secret" shopper services, and consumer satisfaction survey processes) during the franchise term only from us, our affiliates and/or the other specified exclusive sources at the prices we or they decide to charge. We have the absolute right to limit the suppliers with whom you may deal.

You currently must buy certain meats, cheeses, bread, produce, ready-to-bake items, soups, sauces, canned/jarred items, condiments, dry foods, beverages, and packaging from unaffiliated designated sources.

You also currently must use our designated, unaffiliated vendors of gift, loyalty, rewards, and affinity card processing services, mobile app services, quality assurance services, and music network services and, during the Shop's first year of operation, a designated, unaffiliated accounting service to ensure your compliant preparation of required reports and financial statements.

We will identify all designated and approved suppliers in the Operations Manual or other written or electronic communications.

## Purchases from Us

PSW, LLC currently is the only supplier of certain interior menu boards and signage, interior custom lighting, artifacts and décor, and tabletops and bases.

Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 28–34)

Question 53

Is a Potbelly Sandwich Works franchisee required to participate in franchisee advisory councils?

Accepted Answer

- (b) Participation in Franchisee Advisory. Section 8.A(17) is deleted in its entirety.

Source: Item 22 — CONTRACTS (FDD page 79)

Question 54

For Potbelly Sandwich Works franchisees in Maryland, does the Rider to the Franchise Agreement allow them to bring an action in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law, subject to arbitration obligations?

Accepted Answer

However, subject to the parties' arbitration obligations, you may bring an action in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 55

For Potbelly Sandwich Works franchises in Minnesota, does any release signed as a condition of renewal or transfer apply to claims arising under Minn. Rule 2860.4400D?

Accepted Answer

Any release as a condition of renewal and/or assignment/transfer will not apply to the extent prohibited by applicable law for claims arising under Minn. Rule 2860.4400D.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 56

What happens to a Potbelly Sandwich Works franchisee's rights if PSW, LLC's license to the franchisor expires or is terminated?

Accepted Answer

If PSW, LLC's license to us expires or is terminated, your rights under the Franchise Agreement will not be affected. You will have the right to operate your Shop during the remaining franchise term, and any permitted successor franchise agreement term, if you comply for PSW, LLC's benefit with all of your obligations.

Source: Item 13 — TRADEMARKS (FDD pages 51–54)

Question 57

What happens if a Potbelly Sandwich Works franchisee defaults on any agreement with the franchisor during the Large Area Developer Incentive Program?

Accepted Answer

If at any time during the LAD Incentive Program, you (or your affiliate) are in default under any Franchise Agreement, SDAA, or any other agreement with us (or our affiliate), or no longer meet the LAD Incentive Program requirements, then we may immediately terminate the discounts afforded to you under the LAD Incentive Program and you will need to pay the full \$40,000 initial franchise fee for all Potbelly Shops remaining to be opened under your SDAA and pay the entire 6% Royalty percentage for all of your Potbelly Shops opened under your SDAA.

Source: Item 5 — INITIAL FEES (FDD pages 14–17)

Question 58

What happens if the purchaser doesn't cooperate with the seller in repairing or replacing deficient assets at a Potbelly Sandwich Works shop?

Accepted Answer

entatives' entry into the Shops as provided herein.

- (b) In the event that, upon Purchaser's inspection of any Shop, Purchaser determines that there is any material deficiency with respect to the operating condition of the Assets located at such Shop, Purchaser shall provide written notice of the alleged deficiencies to Seller within two (2) Business Days of the date of such inspection. If Seller reasonably determines upon its receipt of such a written notice that the aggregate costs of repairing or replacing the deficient Assets that are located at a particular Shop identified by Purchaser in such written notice would equal or exceed Five Thousand Dollars (\$5,000.00), Seller shall, in its sole discretion, (i) agree to either repair or replace any such deficient Assets, in which case Purchaser shall cooperate with Seller in such repair or replacement, (ii) reduce the Purchase Price to be paid by Purchaser by the reasonable cost of repairing or replacing such deficient Assets, as estimated by Seller, or (iii) terminate this Agreement solely with respect to the affected Shop(s). Notwithstanding the foregoing, in the event Seller elects to terminate this Agreement as provided in the immediatelypreceding sentence, Purchaser shall have the option to rescind Seller's termination by delivering written notice to Seller prior to the Closing Date, in which event, (A) Seller's termination notice shall be null and void, (B) this Agreement shall continue in full force and effect and (C) Seller's liability to repair or replace the deficient

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 59

What happens if a Potbelly Sandwich Works purchaser fails to assume the rights and obligations under the Cash Services Agreement?

Accepted Answer

Section 6.06 Cash Services. Seller and/or one or more of its Affiliates is currently a party to an agreement with Garda CL Great Lakes, Inc. and/or one or more of its Affiliates (the "Armored Car Service") pursuant to which the Armored Car Service provides certain cash collection services with respect to the Shops (such agreement, the "Cash Services Agreement"). At or prior to the Closing and effective as of the Effective Time, Purchaser shall enter into such agreements and provide such other documentation as may be reasonably requested or required by the Armored Car Service in order for Purchaser to assume Seller's and/or its Affiliates' rights and obligations arising from and after the Effective Time under such Cash Services Agreement, in each case to the extent related to the Shops. If Purchaser fails to assume such rights and obligations, Purchaser shall reimburse Seller for the costs and fees charged for the termination of the Cash Services Agreement between Seller and the Armored Car Service with respect to the Shops.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 60

What happens if the purchaser objects to items in the Allocation Schedule provided by the seller for Potbelly Sandwich Works?

Accepted Answer

- (d) Within forty five (45) days after the Closing Date, Seller shall deliver to Purchaser a schedule allocating the Purchase Price (including any Assumed Liabilities treated as consideration for the Assets for tax purposes) (the "Allocation Schedule"). The Allocation Schedule shall be prepared in accordance with Section 1060 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder. The Allocation Schedule shall be deemed final unless Purchaser notifies Seller in writing that Purchaser objects to one or more items reflected in the Allocation Schedule within thirty (30) days after delivery of the Allocation Schedule to Purchaser. In the event of any such objection, Seller and Purchaser shall negotiate in good faith to resolve such dispute; provided, however, that if Seller and Purchaser are unable to resolve any dispute with respect to the Allocation Schedule within thirty (30) days after Purchaser's objection thereto, such dispute shall be resolved by [] or, if [] is unable to serve, another impartial nationally recognized firm of independent certified public accountants mutually appointed by Seller and Purchaser. The fees and expenses of such accounting firm shall be borne equally by Seller and Purchaser. Seller and Purchaser agree to file their respective Forms 8594 with the Internal Revenue Service and all federal, state and local tax returns in accordance with the Allocation Schedule.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 61

What happens if Real Property Taxes or other expenses are addressed in any Assignment or Sublease related to a Potbelly Sandwich Works shop?

Accepted Answer

(b) Not later than ninety (90) days following the Closing Date (or if such date is not a Business Day, the immediately-following Business Day), Seller shall prepare and furnish to Purchaser a reconciliation that shall set forth the actual Inventory and Special Item amounts as of the Effective Time and the apportionment of each Party's Pro Rata Share of all obligations, expenses and prepayments in respect of the Shops as of the Effective Time, including those contemplated by Section 3.03(a) above; provided, however, that to the extent Real Property Taxes or other expenses and charges relating to the ownership and/or occupancy of the Assets and the Leased Real Property are addressed in any Assignment or Sublease, as applicable, such amounts shall be shared as set forth in such Assignment or Sublease.

Purchaser shall review such reconciliation and shall notify Seller of any objections to any amounts shown within fifteen (15) days after receipt.

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 62

If the closing has not occurred by a certain date, can the Potbelly Sandwich Works purchaser terminate the agreement, and under what condition is this not allowed?

Accepted Answer

Section 11.01 Methods of Termination. This Agreement may be terminated prior to the Closing:

- (a) By mutual written agreement of the Parties;
- (b) By Seller, if the Closing has not occurred by [] provided that a default by Seller under this Agreement is not responsible for the Closing not having occurred by such date;
- (c) By Purchaser, if the Closing has not occurred by [], provided that a default by Purchaser or Guarantor under this Agreement is not responsible for the Closing not having occurred by such date;
- (d) By Seller in writing if Purchaser or Guarantor shall (i) fail to perform any of their respective covenants or agreements contained herein required to be performed by them prior to the date of such termination, or (ii) breach any of their respective representations or warranties contained herein or if any such representations or warranties become inaccurate, in each case so as to cause a condition to the Closing to be incapable of satisfaction, which failure, breach or inaccuracy is not cured within fifteen (15) days after Seller has notified Purchaser in writing of its intent to terminate this Agreement pursuant to this Section 11.01(d); or
- (e) By Purchaser in writing if Seller shall (i) fail to perform any of its covenants or agreements contained herein required to be performed by it prior to the date of such termination, or (ii) breach any of its representations or warranties contained herein or if any such representations or warranties become inaccurate, in each case so as to cause a condition to the Closing to be incapable of satisfaction, which failure, breach or inaccuracy is not cured within fifteen (15) days after Purchaser has notified Seller in writing of its intent to terminate this Agreement pursuant to this Section 11.01(e).

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 63

If the closing has not occurred by a certain date, can the Potbelly Sandwich Works seller terminate the agreement, and under what condition is this not allowed?

Accepted Answer

Section 11.01 Methods of Termination. This Agreement may be terminated prior to the Closing:

- (a) By mutual written agreement of the Parties;
- (b) By Seller, if the Closing has not occurred by [] provided that a default by Seller under this Agreement is not responsible for the Closing not having occurred by such date;
- (c) By Purchaser, if the Closing has not occurred by [], provided that a default by Purchaser or Guarantor under this Agreement is not responsible for the Closing not having occurred by such date;
- (d) By Seller in writing if Purchaser or Guarantor shall (i) fail to perform any of their respective covenants or agreements contained herein required to be performed by them prior to the date of such termination, or (ii) breach any of their respective representations or warranties contained herein or if any such representations or warranties become inaccurate, in each case so as to cause a condition to the Closing to be incapable of satisfaction, which failure, breach or inaccuracy is not cured within fifteen (15) days after Seller has notified Purchaser in writing of its intent to terminate this Agreement pursuant to this Section 11.01(d); or
- (e) By Purchaser in writing if Seller shall (i) fail to perform any of its covenants or agreements contained herein required to be performed by it prior to the date of such termination, or (ii) breach any of its representations or warranties contained herein or if any such representations or warranties become inaccurate, in each case so as to cause a condition to the Closing to be incapable of satisfaction, which failure, breach or inaccuracy is not cured within fifteen (15) days after Purchaser has notified Seller in writing of its intent to terminate this Agreement pursuant to this Section 11.01(e).

Source: Item 23 — RECEIPTS (FDD pages 79–355)

Question 64

If a deposit was previously paid under a Shop Development Area Agreement, will Potbelly Sandwich Works credit that amount towards the initial franchise fee?

Accepted Answer

aced with the following:

## A. INITIAL FRANCHISE FEE.

You agree to pay us a nonrecurring and, except as specifically provided in this Agreement, nonrefundable initial franchise fee of Twenty-Five Thousand Dollars (\$25,000). This fee must be paid, and is fully earned by us, when you sign this Agreement. We will credit toward the initial franchise fee any deposit you previously paid u

Source: Item 22 — CONTRACTS (FDD page 79)

Potbelly_Sandwich_Works 2025 FDD FAQ