What happens if a Potbelly Sandwich Works franchisee replaces an Operator?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
If you are a legal entity, you must appoint a shareholder, member or partner (as applicable) to be your "Managing Owner," responsible for overseeing and supervising the Shop's operation. If your Managing Owner will not be involved in the Shop's on-site, day-to-day operation, you also must appoint an "Operator," an individual whom you hire to manage the Shop on an on-site, dayto-day basis (or, if you operate more than one Potbelly Shop, to oversee management and operation of all your Potbelly Shops), who reports to the Managing Owner, who is eligible to participate in a long-term incentive plan (i.e., cash bonus or equity grant), and who completes the applicable training requirements. We must approve your proposed Operator, who must sign our Principal's Agreement (see below). You may replace any Operator, although that person must give up his or her ownership interest in you, a replacement Operator must complete training to our satisfaction, and you must identify and we first must approve any new or replacement Operator. Your Shop always must have on staff at least 3 fully trained, certified key-holding supervisory employees, including a Managing Owner and a General Manager, so that the quality of the Products and the Potbelly brand is maintained.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 56–57)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, if a franchisee needs to replace their Operator, several steps must be taken. First, the individual stepping down from the Operator role must relinquish any ownership stake they hold in the franchisee entity. This ensures a clear separation of management and ownership responsibilities.
Next, any prospective replacement Operator is subject to Potbelly Sandwich Works's approval. This involves the candidate completing the necessary training programs to Potbelly Sandwich Works's satisfaction. This requirement ensures that the new Operator is well-versed in Potbelly Sandwich Works's operational standards and procedures, maintaining brand consistency and quality. The approved Operator must also sign Potbelly Sandwich Works's Principal's Agreement, indicating their commitment to upholding the brand's standards and obligations.
Potbelly Sandwich Works mandates that each shop maintains a minimum of three fully trained and certified key-holding supervisory employees, including a Managing Owner and a General Manager. This staffing requirement is in place to ensure the consistent quality of products and the overall maintenance of the Potbelly Sandwich Works brand. Therefore, when replacing an Operator, the franchisee must ensure that this minimum staffing level is maintained with qualified individuals.