What constitutes a 'Competitive Business' in relation to a Potbelly Sandwich Works franchise?

According to Potbelly Sandwich Works' 2025 Franchise Disclosure Document, a 'Competitive Business' is defined as any fast-casual restaurant deriving more than 20% of its revenue from specific types of sandwiches or frozen treats. These sandwiches include baked, oven-style, conveyor oven-style, or un-baked "sub-style" sandwiches, submarine, hoagie, Italian beef, or hero-type sandwiches, pita sandwiches, flatbread sandwiches, or cheese-steak sandwiches. The frozen treats include smoothies, milkshakes, ice cream, and other frozen confection items. This definition also extends to any business that grants franchises or licenses to others to operate similar types of businesses, excluding other Potbelly Sandwich Works locations operating under a franchise agreement with them.

For a prospective franchisee, this definition is crucial because it outlines the types of businesses that could be considered competitive and therefore potentially restricted during the term of their franchise agreement. Potbelly Sandwich Works specifically names several businesses as examples of 'Competitive Businesses,' including Blimpie, Corner Bakery Café, Firehouse Subs, Jersey Mike's, Jimmy John's, McAlister's Deli, Panera Bread, Quizno's, Schlotzsky's, Subway, Tropical Smoothie Café, and Which Wich. This list provides clarity and examples of the types of establishments that Potbelly Sandwich Works considers to be in direct competition.

This definition impacts a franchisee's ability to own, operate, or have a financial interest in other restaurant businesses, either directly or indirectly, during the franchise term. Franchisees need to be aware of these restrictions to avoid violating their franchise agreement. It is common for franchise agreements to include non-compete clauses to protect the brand and market share of the franchisor. Therefore, prospective franchisees should carefully review this definition and consider any existing or potential business interests they may have to ensure compliance with the franchise agreement.