Where can I find the 'Guaranty and Assumption of Obligations' in the Potbelly Sandwich Works Franchise Agreement?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
If you are a corporation, limited liability company, or partnership, your owners must personally guarantee your obligations under the Franchise Agreement and agree to be bound personally by every contractual provision, whether containing monetary or non-monetary obligations, including the covenant not to compete. This "Guaranty and Assumption of Obligations" is the last 2 pages of the Franchise Agreement. We also may require your Operator, directors, and officers to agree to comply with certain non-monetary obligations in the Franchise Agreement by having them sign our Principal's Agreement (Exhibit D).
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 56–57)
What This Means (2025 FDD)
According to Potbelly Sandwich Works' 2025 Franchise Disclosure Document, if the franchisee is a corporation, limited liability company, or partnership, the owners must personally guarantee the obligations under the Franchise Agreement. This guarantee ensures that the owners are bound by every contractual provision, including the covenant not to compete. The document specifies that the 'Guaranty and Assumption of Obligations' is located in the last 2 pages of the Franchise Agreement.
This requirement is a common practice in franchising, as it provides the franchisor with additional security and recourse in case the franchisee entity fails to meet its obligations. By having the owners personally guarantee the agreement, Potbelly Sandwich Works ensures that there are individuals with personal assets at stake, which can incentivize compliance and performance.
Furthermore, Potbelly Sandwich Works may also require the Operator, directors, and officers to agree to comply with certain non-monetary obligations in the Franchise Agreement by signing a Principal's Agreement, which is included as Exhibit D. This agreement reinforces the importance of adhering to the brand's standards and operational procedures, ensuring consistency across all franchise locations.