What happens to the Potbelly Sandwich Works inventory after the effective time?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
obligations hereunder.
ARTICLE III.
RELATED MATTERS
Section 3.01 Physical Inventory and Cash. On the night immediately preceding the Effective Time, representatives of Seller and Purchaser shall (a) complete a physical inventory of all food, paper inventory, kids' meal premium and cleaning supplies located at the Shops (the "Inventory") and complete and sign Seller's standard inventory form and (b) count the cash to be left in the cash bank at each Shop (the "Cash Bank"). The value of the Inventory shall be based upon Seller's actual cost of such Inventory and the value of the cash shall be the face amount thereof. For purposes of the Closing, the Inventory and Special Items will be assumed to have a value equal to the amount specified in Section 2.05(a)(iii) and Section 2.05(a)(ii), respectively, which estimated values shall be subject to adjustment following the Closing in accordance with Section 3.03(b).
Section 3.02 Franchise Documents.
- (a) At the Closing, Seller will deliver to Purchaser and Guarantor a copy of the Potbelly Franchising, LLC. Unit Franchise Agreement, in its current form, for each Shop, including all addenda thereto (collectively, the "Franchise Documents").
- (b) Within seven (7) Business Days following the Closing Date, Seller shall countersign the Franchise Documents delivered by Purchaser and Guarantor at Closing and deliver fully-executed copies thereof to Purchaser.
Section 3.03 Apportionments.
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, after the effective time of the asset purchase agreement, the seller transfers their rights, titles, and interests in the inventory to the purchaser. This includes all food, paper inventory, kids' meal premiums, and cleaning supplies located at the shops.
Prior to the effective time, representatives from both the seller and the purchaser will conduct a physical inventory of these items to complete the seller's standard inventory form. They will also count the cash in the cash bank at each shop. The inventory will be valued based on the seller's actual cost, and the cash will be valued at its face amount.
For closing purposes, the inventory and special items are assumed to have a value specified in particular sections of the agreement, with these estimated values subject to adjustment after the closing. This ensures a clear process for transferring assets and determining their value during the transition.