What is the geographic scope of the Development Agreement for Potbelly Sandwich Works?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
2.03 Development Rights. During the Term, and provided you and your Affiliates are in compliance with this SDAA and all other agreements with us or any of our Affiliates (including franchise agreements signed pursuant to this SDAA), then we will:
(a) grant to you, in accordance with Section 3, at least that cumulative number of franchises for Potbelly Shops set forth in Exhibit B, all of which are to be located within the geographical area described in Exhibit A (the "Development Area" or "Area"); and
(b) neither operate (directly or through an Affiliate), nor grant any third party the right to operate, any Potbelly Shop located within the Development Area, except for:
(1) Potbelly Shops you will develop pursuant to this SDAA for which you or your Affiliate will sign future franchise agreements for each such location;
(2) Potbelly Shops already open (or under commitment to open) as of the Effective Date;
(3) Potbelly Shops or other restaurants using any part or all of the Branded System and/or Marks at "Non-Traditional Venues" within the Development Area, such as hospitals or medical centers, airports, public or private schools, universities or college campuses, airport terminals, train or bus stations, convention centers, exhibition halls, amusement parks, fairgrounds, sports arenas, military bases, state or national parks, hotels, lodges, country clubs, social clubs, resorts, casinos, theaters, food trucks, or any other similar site or venue that generates customer flow that is independent from the general customer traffic flow of the surrounding area (collectively, "Non-Traditional Venues");
(4) restaurants that we purchase (or as to which we purchase the rights as franchisor) that are part of another franchise system or chain, regardless of whether such restaurants are converted to operate using any of the Marks and/or any or all of the Branded System or whether such restaurants operate under other trademarks, service marks or trade dress and/or use other operating systems; or
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
According to Potbelly Sandwich Works' 2025 Franchise Disclosure Document, the geographic scope of the Development Agreement, also referred to as the "Area", is detailed in Exhibit A of the agreement. The Development Agreement grants the developer the right to open a specific number of Potbelly Shops within this defined geographical area.
Potbelly Sandwich Works agrees not to operate or grant franchises to third parties within the Development Area during the term of the agreement, with some exceptions. These exceptions include Potbelly Shops that the developer will open under future franchise agreements, shops already open or committed to opening as of the agreement's effective date, and shops in "Non-Traditional Venues" like hospitals, airports, schools, or sports arenas. Potbelly Sandwich Works also retains the right to purchase restaurants from other franchise systems or chains within the Development Area, regardless of whether they are converted to Potbelly Sandwich Works restaurants.
The developer is expected to exert their best efforts to fully develop the market potential for Potbelly Shops within the Development Area, adhering to the development schedule outlined in Exhibit B. Potbelly Sandwich Works may delay further development if they believe the developer is not prepared to meet their standards, but only if such delay does not cause a breach of the development schedule. This ensures that Potbelly Sandwich Works maintains control over the brand's expansion while providing the developer with a defined territory for growth.