What happens to the Potbelly Sandwich Works contracts after the effective time?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
- Section 6.11 Misdirected Payments. To the extent that, after the Effective Time, either Purchaser or Seller shall receive any payments from any third parties (other than the Parties hereto or their respective Affiliates) relating to the Business and attributable to the period prior to (in the case of receipt by Purchaser) or after (in the case of receipt by Seller) the Effective Time, the Party receiving the same shall promptly make delivery thereof to the applicable Party entitled to such payment.
- Section 6.12 Access to Information. In addition to Potbelly Franchising, LLC's rights under the Franchise Documents, from and after the Effective Time, Purchaser shall afford Seller and its Affiliates and their respective Representatives with reasonable access to all books and records, at reasonable times and on reasonable notice, relating to the Business or Assets as shall
be necessary for Seller's or its Affiliates' preparation of any federal, state or local tax returns relevant to Seller's operation of the Shops or ownership of the Business or Assets, in each case for any periods prior to the Effective Time.
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, Section 6.11 addresses payments related to the business after the Effective Time. If either the purchaser or Potbelly Sandwich Works receives payments from third parties related to the business that are attributable to a period before (if received by the purchaser) or after (if received by Potbelly Sandwich Works) the Effective Time, the receiving party must promptly deliver those payments to the party entitled to them. This ensures that revenues are correctly allocated based on when they were earned, regardless of when they are received.
Section 6.12 outlines access to information post-Effective Time. Beyond the rights granted to Potbelly Franchising, LLC under the Franchise Documents, the purchaser must allow Potbelly Sandwich Works, its affiliates, and their representatives reasonable access to the business's books and records. This access is for reasonable times and with reasonable notice. The purpose is to allow Potbelly Sandwich Works to prepare federal, state, or local tax returns relevant to their operation of the Shops or ownership of the Business or Assets for periods before the Effective Time. This ensures Potbelly Sandwich Works can fulfill its tax obligations related to the period it operated the business.
In summary, these sections of the Asset Purchase Agreement ensure a smooth transition of financial responsibilities and access to necessary information following the transfer of ownership. The purchaser is obligated to forward misdirected payments to Potbelly Sandwich Works and provide access to records for tax-related matters, protecting Potbelly Sandwich Works's financial interests and compliance requirements even after the sale.