What is the effect of Schedule 5.04 on the 'No Defaults' section of the Potbelly Sandwich Works agreement?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
Section 5.04 No Defaults. Except as set forth in Schedule 5.04, neither the execution and delivery of this Agreement nor the other Transaction Agreements nor the consummation of the transactions contemplated hereby and thereby will: (a) violate any provision of the articles of
organization or other organizational documents of Purchaser; (b) violate, or conflict with, or constitute a default (or constitute an event that, with notice or lapse of time or both, would constitute a default) under, or give rise to any right of termination, cancellation or acceleration under, any Contract to which Purchaser and/or Guarantor is a party or by which Purchaser, Guarantor or any of their respective assets may be bound; or (c) violate any Law applicable to Purchaser, Guarantor or any of their respective assets.
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, Section 5.04, titled "No Defaults," includes an exception. Specifically, the section states that the execution and delivery of the agreement, along with other transaction agreements and the consummation of transactions, will not cause a default, conflict, or violation, "Except as set forth in Schedule 5.04".
This means that Schedule 5.04 lists specific situations or conditions that would otherwise be considered a default but are explicitly excluded or addressed separately. In essence, it acts as an addendum that modifies or clarifies the "No Defaults" provision.
For a potential Potbelly Sandwich Works franchisee, this highlights the importance of carefully reviewing Schedule 5.04 to understand what exceptions exist to the "No Defaults" clause. These exceptions could represent potential risks or liabilities that the franchisee needs to be aware of before entering into the agreement. It is essential to understand the specific items listed in Schedule 5.04 and how they might impact the franchisee's obligations and rights under the agreement.