Is a felony conviction of a Potbelly Sandwich Works franchisee considered a cause for termination?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | AGREEMENT | SUMMARY |
|---|---|---|
| failure to operate Shop actively; | ||
| unapproved transfers or surrenders | ||
| of control; material | ||
| misrepresentation or omission; | ||
| conviction of a felony; dishonest, | ||
| unethical, or immoral conduct that | ||
| could materially, adversely affect | ||
| Marks; unauthorized use or | ||
| disclosure of Operations Manual | ||
| or other confidential information; | ||
| you make an unauthorized | ||
| representation or warranty on our | ||
| behalf; loss of right to occupy | ||
| Shop site due to your lease | ||
| default; failure to pay taxes; | ||
| understating Total Revenue by | ||
| certain minimum amounts; | ||
| interfering with our right to | ||
| inspect or observe the Shop; Shop | ||
| fails 3 quality assurance audits | ||
| during 12-month period; your | ||
| Shop fails Annual Shop Review | ||
| during 3 consecutive fiscal years | ||
| or any 5 years (even if not | ||
| consecutive) of the franchise term; | ||
| repeated defaults (even if cured); | ||
| assignment for benefit of | ||
| creditors; violation of any anti | ||
| terrorism law; and we send notice | ||
| of termination under another | ||
| franchise agreement between you | ||
| (or an affiliate) and us | ||
| We may terminate SDAA for | ||
| insolvency; failure to meet | ||
| development schedule; | ||
| unauthorized transfer; | ||
| misrepresentations; conviction of | ||
| a felony; unauthorized disclosure | ||
| of confidential information; any | ||
| default by you under a franchise |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 58–65)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, a felony conviction is considered a cause for termination of the franchise agreement. Specifically, if a franchisee is convicted of a felony, Potbelly Sandwich Works has grounds to terminate the franchise agreement. This is listed under non-curable defaults.
This provision means that a Potbelly Sandwich Works franchisee's criminal record during the franchise term can directly impact their ability to continue operating their franchise. Unlike some other defaults that can be corrected, a felony conviction is typically an immediate and non-curable cause for termination. This clause aims to protect the brand's reputation and ensure that franchisees meet certain ethical and legal standards.
It is important for prospective franchisees to understand that this termination clause is standard in many franchise agreements. Franchisees should maintain ethical and legal compliance to avoid potential termination. This also extends to the Sub-Development Area Agreement (SDAA), where Potbelly Sandwich Works may terminate the agreement for a franchisee's felony conviction.