Does Potbelly Sandwich Works grant an exclusive territory to its franchisees?

de-identify the Shop's original site as we require.

You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control. You also do not have any type of non-exclusive territory. We (and any affiliates we periodically have) retain the right during the franchise term to engage in any and all activities that we (and they) desire, at any time or place, whether or not those activities compete with your Shop. Our unlimited rights include the right to (1) construct, develop, and operate, and grant to others the right to construct, develop, and operate, Potbelly Shops anywhere we want and on any terms and conditions we deem appropriate, (2) offer and sell Products and other items identified by the Marks or any other trademarks to any customers, wherever located or operating, and through any distribution channels (including the Internet, grocery, specialty, and other retail stores, food trucks, and other points of distribution), wherever located or operating, (3) construct, develop, and operate, and grant to others the right to construct, develop, and operate, any types of stores or other foodservice businesses under any trademarks anywhere we want and on any terms and conditions we deem appropriate, (4) acquire the assets or ownership interests of one or more businesses providing products and services the same as or similar to those provided at Potbelly Shops, and franchising, licensing or creating similar arrangements with respect to these businesses once acquired, wherever these businesses (or the franchisees or licensees of these businesses) are located or operating, (5) be acquired (whether through acquisition of assets, ownership interests or otherwise, regardless of the form of transaction), by a business providing products and services similar to those provided at Potbelly Shops, or by another business, and (6) engage in all other activities the Franchise Agreement does not expressly prohibit. We need not compensate you if

we engage in these activities. Continuation of your franchise does not depend on your achieving a certain sales volume, market penetration, or other contingency.

You have no options, rights of first refusal, or similar rights to acquire additional franchises. You may not conduct delivery or catering activities away from the Shop, or take customer orders "on-line," unless and until we require you to do so or notify you in writing that you may do so (although we have no obligation to allow these activities by a certain date or at all). If we require or allow these activities, you must comply with all our System Standards, including using only the delivery service provider(s) we specify in writing for your Shop and limiting the delivery services to any delivery area we specify to you in writing. Any delivery area we specify is not exclusive and we may engage, and/or allow other franchisees and third parties to engage, in any activities we desire within the delivery area without any restrictions (including allowing other Potbelly Shop franchisees and delivery service providers to provide delivery services in the delivery area). Any delivery area we specify is nothing more than the geographic boundaries in which you may deliver those products approved for delivery from the Shop, and no other rights are granted to you.

Although we have the right to do so (as described above), we and our affiliates have not established other franchises or company-owned outlets or another distribution channel selling or leasing similar products or services under a different trademark. Except as provided above regarding delivery and catering activities, there are no restrictions on where you may solicit or accept orders for Products. However, you have no right to use other distribution channels (for example, the Internet, catalog sales, or telemarketing) to make sales away from the Shop's site.

Shop Development Area Agreement

You may (if you qualify) develop and operate additional Potbelly Shops within a specific area (the "Area") as identified in the SDAA. We and you will identify the Area in the SDAA before signing it. The Area typically is a city, cities, county, counties, or other political subdivisions. We base the Area's size primarily on the number of Potbelly Shops you agree to develop, demographics, and site availability. We and you will negotiate the number of Shops you must develop, and the dates by which you must develop them, to keep your development rights. We and you then will complete the schedule in the SDAA before signing it.

While the SDAA is in effect, we (and our affiliates) will not, except as described below with Non-Traditional Venues, establish and operate or grant to others the right to establish and operate other Potbelly Shops having their physical locations within the Area. There are no other restrictions on us (or our affiliates) within the Area. We will accept the proposed locations of your additional Shops only if they meet our then-current standards for Shop sites. Because of our rights at the Non-Traditional Venues described below, you will not receive an exclusive territory under the SDAA. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.

You (and your approved affiliates) may not under any circumstances, unless we otherwise approve, develop and operate Potbelly Shops at Non-Traditional Venues located in the Area. A "Non-Traditional Venue" means a hospital or medical center, airport, public or private school, university or college campus, airport terminal, train or bus station, convention center, exhibition hall, amusement park, fairground, sports arena, military base, state or national park, hotel, lodge,

country club, social club, resort, casino, theater, or food truck. We (and our affiliates) reserve the exclusive rights with respect to all Non-Traditional Venues in the Area and may establish and operate, and franchise or license others to establish and operate, Potbelly Shops at Non-Traditional Venues located in the Area. Our, our affiliate's, or another franchisee's or licensee's development and operation of a Potbelly Shop at a Non-Traditional Venue in the Area does not reduce the number of Potbelly Shops you must develop in the Area in compliance with your development schedule.

Despite your development schedule under the SDAA, we may delay your development of additional Potbelly Shops within the Area for the time period we deem best if we believe, when you apply for that next Shop, that you (or your approved affiliate) are not yet operationally, managerially, or otherwise prepared, due to the particular amount of time that has elapsed since you (or your approved affiliate) developed and opened your most recent Potbelly Shop, to develop, open and/or operate the additional Shops in full compliance with our standards and specifications. We may delay additional development as long as the delay will not in our reasonable opinion cause you to breach your development obligations under the development schedule (unless we are willing to extend the schedule to account for the delay).

We may exercise all of the rights that we now reserve in the Franchise Agreement (as described above).

Source: Item 12 — TERRITORY (FDD pages 49–51)