What continuing obligations does a Potbelly Sandwich Works developer have after termination or expiration of the SDAA?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
- 9.01 Continuing Obligations. All obligations under this SDAA which expressly or by their nature survive the expiration or termination of this SDAA shall continue in full force and effect until they are satisfied in full or by their nature expire.
- 9.02 Post-Term Covenants. For a period of two (2) years, starting on the effective date of termination or expiration of this SDAA, you and your Owners are prohibited from directly or indirectly (such as through an Immediate Family member) owning a legal or beneficial interest in, or rendering services or giving advice to: (a) any Competitive Business operating within the Development Area; (b) any Competitive Business operating within a radius of five (5) miles of any Potbelly Shop (whether franchised or Affiliate or company-owned), whether in operation or under construction on the effective date of termination or expiration; or (c) any entity which grants franchises, licenses or other interests to others to operate any Competitive Business. You acknowledge that we have a protectable legal interest in the Branded System, customers of Potbelly Shops and the goodwill associated with the Marks and that the noncompetition covenants contained in this Section and Section 6.02 are necessary elements to their protection and are an integral part of this SDAA. You and each of your Owners expressly acknowledge the possession of skills and abilities of a general nature and other opportunities for exploiting such skills, so that enforcement of the covenants contained in this Section will not deprive you of your personal goodwill or ability to earn a living. If you fail or refuse to abide by any of the foregoing covenants, and we obtain enforcement in a judicial or arbitration proceeding, the obligations under the breached covenant will be tolled during the period(s) of time that the covenant is breached and/or we seek to enforce it, and will continue in effect for a period of two (2) years after the date of order enforcing the covenant.
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, obligations that expressly or by their nature survive the expiration or termination of the SDAA (Shop Development Area Agreement) will remain in effect until fully satisfied or naturally expired.
For two years after the termination or expiration date, the developer and their Owners are prohibited from having any interest in, providing services to, or advising any Competitive Business within the Development Area. This restriction also applies to any Competitive Business operating within a five-mile radius of any Potbelly Shop, whether franchised, affiliate, or company-owned, and to any entity that grants franchises or licenses for Competitive Businesses.
The FDD states that Potbelly Sandwich Works has a protectable legal interest in its Branded System, customers, and goodwill associated with its Marks. The non-competition covenants are essential for protecting these interests. If a developer fails to comply with these covenants, and Potbelly Sandwich Works pursues enforcement through legal proceedings, the obligations under the breached covenant will be suspended during the period of the breach and/or enforcement efforts. The covenant will then remain in effect for two years after the date of the enforcement order.