Does the Potbelly Sandwich Works agreement specify that it benefits the parties' successors?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
Section 12.04 Assignment. This Agreement, and all of the provisions hereof, shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns. No Party may assign this Agreement or any of its rights hereunder or delegate any of its obligations hereunder without the prior written consent of the other Parties; provided that Seller may, without the consent of Purchaser or any Guarantor, assign this Agreement or any of its rights hereunder, or delegate any of its obligations hereunder, to any of its Affiliates (provided that Seller remains principally liable for its obligations hereunder) or to any successor in interest (whether by purchase, merger, consolidation, conversion or otherwise) to all or
substantially all of the business operations and/or assets of Seller. Any attempt or purported assignment or delegation in contravention of the foregoing shall be deemed void ab initio.
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, the Asset Purchase Agreement specifies that the agreement shall be binding upon and inure to the benefit of the parties involved and their respective successors and permitted assigns. This means that the agreement's terms and conditions will not only apply to the original parties but also to any individuals or entities that inherit or are assigned the rights and obligations of the agreement.
For a prospective Potbelly Sandwich Works franchisee, this clause ensures that if the franchisor sells the business or transfers its rights, the franchisee's agreement remains valid and enforceable with the new entity. Similarly, if a franchisee sells their franchise to a new owner, the agreement's benefits and obligations transfer to the new franchisee, provided the assignment is permitted.
However, the agreement also states that no party may assign the agreement or any of its rights without the prior written consent of the other parties. There is an exception for Potbelly Sandwich Works, which may assign the agreement to its affiliates or a successor in interest without the franchisee's consent, provided that Potbelly Sandwich Works remains principally liable or the assignment is to a successor in interest to substantially all of its business operations and/or assets. Any attempt to assign or delegate the agreement in violation of these terms is considered void.