What is the effective time for the transfer of Potbelly Sandwich Works assets?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
- Section 2.02 Assets to be Transferred. Except as otherwise provided in Section 2.03, on the terms and subject to the conditions of this Agreement, at the Closing and effective as of the Effective Time, Seller shall sell, convey, assign and transfer to Purchaser all of Seller's right, title and interest in and to the following properties and assets that are used exclusively in connection with the Shops (collectively, the "Assets") free and clear of all Liens except for Permitted Liens:
- (a) all of the furniture, trade fixtures and equipment, including, without limitation, ovens, that are owned by Seller and located at a Shop as of the Effective Time (collectively, the "Equipment");
- (b) to the extent assignable, the Contracts to which Seller is a party that are in effect as of the Effective Time and that relate exclusively to the Business, including those listed in Schedule 2.02(b) (collectively, the "Assigned Contracts");
- (c) the Cash Bank for each Shop and other prepaid and special items listed on Schedule 2.02(c) (collectively, the "Special Items");
- (d) the Inventory and all other inventories, supplies and other tangible personal property that are owned by Seller and located in a Shop as of the Effective Time including but not limited to counters, shelving, racks, slat walls, display cases, décor, tables, seating, signs, promotional items and materials, new and unused uniforms, smallwares and office supplies (collectively, the "Personal Property").
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
According to the 2025 FDD, Potbelly Sandwich Works details the asset transfer process in Section 2.02. At the closing of the asset purchase agreement, the transfer of assets from the seller (Potbelly Sandwich Works, LLC) to the purchaser becomes effective as of the "Effective Time." This transfer is subject to the terms and conditions outlined in the agreement.
The assets to be transferred include furniture, trade fixtures, and equipment (such as ovens) owned by Potbelly Sandwich Works and located at the shop at the Effective Time. Additionally, assignable contracts related exclusively to the business that are in effect at the Effective Time, the cash bank for each shop, prepaid items, special items, inventory, supplies, and other tangible personal property owned by the seller and located in the shop at the Effective Time will be transferred to the purchaser.
This means that a new Potbelly Sandwich Works franchisee will gain ownership and control of the specified assets at a defined moment, contingent upon fulfilling the conditions of the Asset Purchase Agreement. The franchisee should pay close attention to the definition of "Effective Time" in the agreement and ensure all conditions are met to facilitate a smooth transfer of assets. Understanding precisely what constitutes the assets is also crucial, as it defines the scope of what the franchisee will own and operate.