What is the 'blue penciled' clause in the Potbelly Sandwich Works SDAA related to?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
THE FOLLOWING PAGES ARE STATE-SPECIFIC RIDERS TO THE SHOP DEVELOPMENT AREA AGREEMENT
RIDER TO THE POTBELLY FRANCHISING, LLC SHOP DEVELOPMENT AREA AGREEMENT FOR USE IN ILLINOIS
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 ("you," address "your" is or "Developer"). 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) any of the offering or sales activity relating to the SDAA occurred in the State of Illinois and the Development Area under the SDAA will be located in the State of Illinois, and/or (b) you are a resident of Illinois. 2. Consent to Jurisdiction. Section 10.07. of the SDAA is deleted in its entirety and replaced IN CONFORMANCE WITH SECTION 4 OF THE ILLINOIS FRANCHISE DISCLOSURE ACT, ANY PROVISION IN A SDAA THAT DESIGNATES JURISDICTION AND VENUE IN A FORUM OUTSIDE OF THE STATE OF ILLINOIS IS VOID. HOWEVER, A SDAA MAY PROVIDE FOR ARBITRATION TO TAKE PLACE OUTSIDE OF ILLINOIS.
- Jury Trial Waiver. The following language is added to the end of the second paragraph of Section 10.10. of the SDAA:
HOWEVER, THIS WAIVER SHALL NOT APPLY TO THE EXTENT PROHIBITED BY SECTION 705/41 OF THE ILLINOIS FRANCHISE DISCLOSURE ACT OF 1987 OR ILLINOIS REGULATIONS AT SECTION 260.609.
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
According to the 2025 Potbelly Sandwich Works FDD, if a Shop Development Area Agreement (SDAA) is signed in Illinois, Section 10.07 of the SDAA, which designates jurisdiction and venue, is deleted and replaced. In conformance with Section 4 of the Illinois Franchise Disclosure Act, any provision in a SDAA that designates jurisdiction and venue in a forum outside of the State of Illinois is void. However, a SDAA may provide for arbitration to take place outside of Illinois. This means that any legal disputes or proceedings must occur within Illinois, although arbitration can occur outside of the state.
Additionally, the FDD states that the jury trial waiver in Section 10.10 of the SDAA includes added language specifying that the waiver does not apply to the extent prohibited by Section 705/41 of the Illinois Franchise Disclosure Act of 1987 or Illinois regulations at Section 260.609. This clarifies that the standard jury trial waiver may not be fully enforceable in Illinois, depending on the specifics of Illinois law.
These stipulations are included as a rider to the Shop Development Area Agreement for use in Illinois. The rider is made and entered into as of the effective date, regardless of the dates of the parties' signatures, by and between Potbelly Franchising, LLC, and the developer. The rider is annexed to and forms part of the SDAA because any of the offering or sales activity relating to the SDAA occurred in the State of Illinois and the Development Area under the SDAA will be located in the State of Illinois, and/or you are a resident of Illinois.