What happens if a Potbelly Sandwich Works franchisee is convicted of a felony?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
2. The following is added to the end of Item 3:
Except as provided, above with regard to the franchisor, its predecessor, a person identified in Item 2, or an affiliate offering franchises under the franchisor's principal trademark:
- A. No such party has an administrative, criminal or civil action pending against that person alleging: a felony, a violation of a franchise, antitrust, or securities law, fraud, embezzlement, fraudulent conversion, misappropriation of property, unfair or deceptive practices, or comparable civil or misdemeanor or allegations.
- B. No such party has pending actions, other than routine litigation incidental to the business, which are significant in the context of the number of franchisees and the size, nature or financial condition of the franchise system or its business operations.
- C. No such party has been convicted of a felony or pleaded nolo contendere to a felony charge or, within the 10 year period immediately preceding the application for registration, has been convicted of or pleaded nolo contendere to a misdemeanor charge or has been the subject of a civil action alleging: violation of a franchise, antifraud, or securities law; fraud; embezzlement; fraudulent conversion or misappropriation of property; or unfair or deceptive practices or comparable allegations.
- D. No such party is subject to a currently effective injunctive or restrictive order or decree relating to the franchise, or under a Federal, State, or Canadian franchise, securities, antitrust, trade regulation or trade practice law, resulting from a concluded or pending action or proceeding brought by a public agency; or is subject to any currently effective order of any national securities association or national securities exchange, as defined in the Securities and Exchange Act of 1934, suspending or expelling such person front membership in such association or exchange; or is subject to a, currently effective
injunctive or restrictive order relating to any other business activity as a result of an action brought by a public agency or department, including, without limitation, actions affecting a license as a real estate broker or sales agent.
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
The 2025 Franchise Disclosure Document for Potbelly Sandwich Works addresses the topic of felony convictions in the context of actions against the franchisor, its predecessors, individuals identified in Item 2, or affiliates offering franchises under the Potbelly Sandwich Works trademark. Specifically, Item 23 outlines that no such party should have a pending administrative, criminal, or civil action alleging a felony. It also states that no such party should have been convicted of a felony or pleaded nolo contendere to a felony charge within the 10-year period preceding the application for registration.
This disclosure is intended to provide transparency to potential franchisees regarding the backgrounds of the key individuals and entities within the Potbelly Sandwich Works franchise system. The presence of felony allegations or convictions could raise concerns about the integrity and management of the franchise, potentially impacting a franchisee's investment and the overall reputation of the brand. This information helps prospective franchisees assess the risks associated with investing in a Potbelly Sandwich Works franchise.
However, the FDD excerpt does not explicitly detail the consequences if a Potbelly Sandwich Works franchisee themselves are convicted of a felony. A prospective franchisee should seek clarification from Potbelly Sandwich Works regarding the specific policies and procedures that would be enacted if a franchisee is convicted of a felony during the term of their Franchise Agreement. This would include understanding potential termination clauses, transfer options, and any other ramifications that could arise from such a conviction.