Is the development fee refundable under the Potbelly Sandwich Works SDAA?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
The development fee is not
- refundable. (SDAA Section, 2, 4 and 6) We will accept the proposed locations of your additional Shops only if they meet our then-current standards for Shop sites.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 37–49)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, the development fee paid under the Store Development Agreement (SDAA) is not refundable. This means that if a prospective franchisee signs an SDAA to develop multiple Potbelly Sandwich Works shops in a specific area, the development fee paid to secure those rights will not be returned under any circumstances, even if the franchisee fails to open the agreed-upon number of locations or the agreement is terminated.
This non-refundable policy is a significant financial consideration for potential multi-unit developers. It is crucial for franchisees to carefully evaluate their ability to meet the development schedule and financial obligations outlined in the SDAA before committing to the agreement and paying the development fee. The FDD also states that if acceptable sites are not found and the development schedule is not met, Potbelly Sandwich Works may terminate the SDAA.
Prospective franchisees should be aware that this policy is not uncommon in the franchise industry, as franchisors often incur costs in granting exclusive development rights and providing initial support. However, it underscores the importance of thorough due diligence and realistic planning before entering into a multi-unit development agreement with Potbelly Sandwich Works. Franchisees should seek legal and financial advice to fully understand the implications of the non-refundable development fee and the terms of the SDAA.