Does the Potbelly Sandwich Works agreement allow claims to be heard outside of Illinois?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
STATE THAT WOULD APPLY THE LAWS OF ANOTHER JURISDICTION.
Section 12.06 Jurisdiction. Each Party to this Agreement hereby irrevocably and unconditionally: (a) submits itself and its property to the exclusive jurisdiction of any federal or state court sitting in the State of Illinois in any action directly or indirectly arising out of or relating to this Agreement, the transactions contemplated by this Agreement, or the formation, breach, termination or validity of this Agreement and agrees that all claims in respect of any such action shall be heard and determined solely in such court; (b) consents that any such action shall be brought in such court and waives any objection that it may now or hereafter have to the venue or jurisdiction of any such action in such court or that such court is an inconvenient forum for the action and agrees not to assert, plead or claim the same; (c) agrees that the final judgment of such court shall be enforceable in any court having jurisdiction over the relevant Party or any of its assets; (d) agrees that service of process in any such action may be effected by mailing a copy of such process by registered or certified mail (or any substantially-similar form of mail), postage prepaid, to such Party at its address as provided in Section 12.03; and (e) agrees that nothing in this Agreement shall affect the right to effect service of process in any other manner permitted by the applicable rules of procedure.
Section 12.07 Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
According to Potbelly Sandwich Works' 2025 Franchise Disclosure Document, the franchise agreement stipulates that legal disputes will generally be heard in Illinois, but there are exceptions for franchisees in certain states. Specifically, Section 12.06(a) states that each party submits to the exclusive jurisdiction of federal or state courts in Illinois for any action relating to the agreement. This means Potbelly Sandwich Works franchisees are generally required to litigate disputes in Illinois.
However, the FDD includes state-specific riders that modify this requirement. For instance, the Rider to the Potbelly Franchising, LLC Shop Development Area Agreement for use in Illinois states that any provision designating jurisdiction and venue outside of Illinois is void, but arbitration may occur outside of Illinois. This suggests that while Illinois franchisees cannot be forced to litigate elsewhere, they may agree to arbitration outside the state.
Additionally, riders for franchisees in California, Hawaii, Indiana, Michigan, Rhode Island, South Dakota, Virginia, and Wisconsin address waivers and disclaimers but do not directly address the jurisdiction. Similarly, a rider for North Dakota franchisees modifies release and noncompetition clauses but does not change the jurisdiction. Therefore, while Potbelly Sandwich Works generally requires disputes to be resolved in Illinois, state-specific regulations, particularly in Illinois, may allow for arbitration outside of the state, and franchisees should carefully review the rider applicable to their state.