What must certificates representing ownership interests in a Potbelly Sandwich Works franchise bear?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
As a corporation, limited liability company, or general, limited, or limited liability partnership (each, an "Entity"), you agree and represent that:
- (1) You have the authority to sign, deliver, and perform your obligations under this Agreement and all related agreements and are duly organized or formed and validly exist in good standing under the laws of the state of your incorporation or formation;
- (2) Your organizational documents, operating agreement, or partnership agreement, as applicable, will recite that this Agreement restricts the issuance and transfer of certain ownership interests in you, and all certificates and other documents representing ownership interests in you will bear a legend (the wording of which we may specify) referring to those restrictions;
- (3) Exhibit A to this Agreement completely and accurately identifies all of your owners and their interests in you as of the Effective Date;
Source: Item 22 — CONTRACTS (FDD page 79)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, if the franchisee is a corporation, limited liability company, or partnership, the organizational documents must state that the franchise agreement restricts the issuance and transfer of ownership interests. Furthermore, all certificates and documents representing ownership interests must bear a legend referring to these restrictions. The specific wording of this legend may be specified by Potbelly Sandwich Works.
This requirement ensures that Potbelly Sandwich Works maintains control over who owns and operates its franchises. By restricting the transfer of ownership interests, Potbelly Sandwich Works can ensure that new owners meet its standards and qualifications. This protects the brand's reputation and the consistency of the franchise system.
For a prospective franchisee, this means that if you plan to operate your Potbelly Sandwich Works franchise through a business entity, you must ensure that your organizational documents and ownership certificates include the required legend. This is a legal requirement that must be followed to maintain compliance with the franchise agreement. It is advisable to consult with an attorney to ensure that your documents meet Potbelly Sandwich Works's requirements.