How does Potbelly Sandwich Works define an 'Affiliate' in relation to a specified person?

According to Potbelly Sandwich Works' 2025 Franchise Disclosure Document, an 'Affiliate' is defined as any person or entity that directly or indirectly owns or controls the referenced party, is directly or indirectly owned or controlled by the referenced party, or is under common control with the referenced party. The term 'control' is further defined as the power to direct the management and policies of an entity, whether through ownership of voting securities, by contract, or otherwise.

For a prospective franchisee, this definition is important because it clarifies the scope of relationships that Potbelly Sandwich Works considers relevant to the franchise agreement. This could impact various aspects of the franchise operation, including potential conflicts of interest, assignment of agreements, and competitive business activities.

For example, if a franchisee has a business partner who owns a significant portion of a competing sandwich shop, that partner and the competing business might be considered affiliates. This could trigger certain restrictions or obligations under the franchise agreement. Similarly, Potbelly Sandwich Works can assign the agreement to an affiliate without the franchisee's consent, provided that Potbelly Sandwich Works remains liable for its obligations.

Understanding this definition is crucial for franchisees to ensure they are in compliance with the franchise agreement and to avoid any unintended consequences related to their business relationships.