What happens to the deposits related to utility services for Potbelly Sandwich Works?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
Section 6.05 Utilities.
(a) Schedule 6.05(a) sets forth a list of certain agreements that Seller has entered into with telecommunications suppliers (collectively, the "Suppliers") for telecommunications services with respect to the Shops identified on Schedule 6.05(a) (such agreements, the "Supply Agreements"). At or prior to the Closing and effective as of the Effective Time, Purchaser shall enter into such agreements and provide such other documentation as may be reasonably requested or required by the Suppliers in order for Purchaser to assume Seller's and/or its Affiliates' rights and obligations arising from and after the Effective Time under such Supply Agreements, in each case to the extent related to such Shops. In furtherance of the foregoing, if any Supplier determines based on its review of Purchaser's credit that any deposits, letters of credit, guarantees or other security is required in order for Purchaser to undertake the foregoing assumption, Purchaser agrees to provide, or cause to be provided, such deposits, letters of credit, guarantees or other security as may be reasonably required by the Supplier.
(b) Prior to the Closing, Seller and Purchaser shall (i) notify those utility companies that service the Shops that Purchaser shall be responsible for the payment of any and all obligations related to such utility services incurred from and after the Effective Time and (ii) to the extent practicable, cause meters to be read as of the Effective Time (or as soon as reasonably practicable thereafter) to determine the actual amounts attributable to Seller and Purchaser in respect of such utilities for the operation of the Business preand post-Closing.
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
According to Potbelly Sandwich Works' 2025 Franchise Disclosure Document, the company outlines the handling of utility service agreements and related deposits when a purchaser acquires assets. Prior to the closing of the asset purchase, Potbelly Sandwich Works and the purchaser must notify utility companies servicing the shops that the purchaser will be responsible for all obligations related to utility services incurred after the effective time of the purchase.
Potbelly Sandwich Works and the purchaser will also try to have the utility meters read as of the effective time, or as soon as reasonably possible afterward, to determine the amounts attributable to each party for utility usage before and after the closing.
Furthermore, regarding telecommunications services, if a supplier requires deposits, letters of credit, guarantees, or other security based on the purchaser's credit review, the purchaser agrees to provide the necessary security to assume Potbelly Sandwich Works' obligations under the supply agreements. This ensures the continuation of utility services without interruption during the transfer of ownership.