What conditions must be met to maintain development rights for Potbelly Sandwich Works during the Term?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
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; or
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, to maintain development rights during the term of the agreement, a franchisee and their affiliates must be in compliance with the SDAA (Site Development Area Agreement) and all other agreements with Potbelly Sandwich Works or its affiliates. This includes franchise agreements signed as part of the SDAA.
If these conditions are met, Potbelly Sandwich Works will grant the franchisee at least the cumulative number of franchises for Potbelly Shops as outlined in Exhibit B, within the geographical area defined in Exhibit A, known as the Development Area. Potbelly Sandwich Works also agrees not to operate or grant any third party the right to operate a Potbelly Shop within the Development Area, with some exceptions.
These exceptions include Potbelly Shops the franchisee will develop under the SDAA, existing Potbelly Shops, Potbelly Shops in Non-Traditional Venues (such as hospitals, airports, or schools), and restaurants that Potbelly Sandwich Works purchases as part of another franchise system. This ensures that the franchisee has the exclusive right to develop Potbelly Sandwich Works locations within their designated area, subject to the specified exceptions, as long as they remain in compliance with all agreements.