How does Potbelly Sandwich Works notify a franchisee of termination of the Franchise Agreement?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
If you and your owners are fully complying with this Agreement and we materially fail to comply with this Agreement and do not correct the failure within thirty (30) days after you deliver to us written notice of the material failure or, if we cannot correct the failure within thirty (30) days, do not give you within thirty (30) days after your notice reasonable evidence of our effort to correct the failure within a reasonable time (which may extend beyond that thirty (30) days), you may terminate this Agreement effective an additional thirty (30) days after you deliver to us written notice of termination. (The time period during which we may cure any alleged material default after your delivery of notice is called the "Cure Period".) However, if we send you written notice during the Cure Period indicating that either (1) we do not agree that we have materially failed to comply with this Agreement or (2) we have fully corrected the failure, then you may not terminate this Agreement. If you disagree with our position and still wish to terminate this Agreement, you must commence an arbitration proceeding seeking a declaration of your right to terminate this Agreement.
Source: Item 22 — CONTRACTS (FDD page 79)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, Potbelly Sandwich Works franchisees have specific notification protocols for franchise agreement terminations, depending on who is initiating the termination. If a franchisee believes Potbelly Sandwich Works has materially failed to comply with the agreement, the franchisee must first deliver a written notice detailing the failure. Potbelly Sandwich Works then has thirty days to correct the failure or provide reasonable evidence of their effort to correct it within a reasonable timeframe. If Potbelly Sandwich Works sends a written notice during this period stating they either disagree with the claim of failure or have corrected it, the franchisee cannot terminate the agreement unless they commence an arbitration proceeding to declare their right to terminate.
Conversely, the FDD excerpt does not detail the exact method Potbelly Sandwich Works uses to notify a franchisee of termination. However, it does state that if the franchisee and their owners are fully complying with the agreement, and Potbelly Sandwich Works materially fails to comply and does not correct the failure within thirty days after written notice from the franchisee, the franchisee may terminate the agreement with an additional thirty days' written notice of termination. This suggests that Potbelly Sandwich Works is also expected to provide written notice in the event they are initiating the termination.
Prospective franchisees should seek clarification from Potbelly Sandwich Works regarding the specific procedures and methods the company uses to provide notification of termination. Understanding these notification protocols is crucial for franchisees to protect their rights and investments in the event of a dispute or disagreement leading to termination.