What is the 'Development Area' for a Potbelly Sandwich Works development?
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 the 2025 Potbelly Sandwich Works FDD, the Development Area is the geographical area described in Exhibit A of the Shop Development Area Agreement (SDAA). Potbelly Sandwich Works grants the developer the right to open the number of franchises, as outlined in Exhibit B, within this designated Development Area.
Potbelly Sandwich Works will not operate or allow third parties to operate any Potbelly Sandwich Works within the Development Area during the agreement term. However, there are exceptions to this exclusivity. Potbelly Sandwich Works retains the right to operate or franchise locations within the Development Area under certain circumstances, including Potbelly Sandwich Works the developer will develop, Potbelly Sandwich Works already open as of the agreement's effective date, Potbelly Sandwich Works in "Non-Traditional Venues" (such as airports, hospitals, and college campuses), and restaurants that Potbelly Sandwich Works purchases as part of another franchise system.
The developer is expected to exert their best efforts to fully develop the market potential for Potbelly Sandwich Works within the Development Area, adhering to the development schedule outlined in Exhibit B. Failure to meet the development obligations, such as meeting the required number of Potbelly Sandwich Works to be developed or lease control dates, constitutes a material breach of the SDAA. This can lead to termination of the agreement and loss of rights to develop further Potbelly Sandwich Works in the area, as well as the Development Fee attributable to the undeveloped Potbelly Sandwich Works.