What is Potbelly Sandwich Works obligated to grant the developer during the Term of the SDAA?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
2.03 Development Rights. During the Term, and provided you and your Affiliates are in compliance with this SDAA and all other agreements with us or any of our Affiliates (including franchise agreements signed pursuant to this SDAA), then we will:
(a) grant to you, in accordance with Section 3, at least that cumulative number of franchises for Potbelly Shops set forth in Exhibit B, all of which are to be located within the geographical area described in Exhibit A (the "Development Area" or "Area"); and
(b) neither operate (directly or through an Affiliate), nor grant any third party the right to operate, any Potbelly Shop located within the Development Area, except for:
(1) Potbelly Shops you will develop pursuant to this SDAA for which you or your Affiliate will sign future franchise agreements for each such location;
(2) Potbelly Shops already open (or under commitment to open) as of the Effective Date;
(3) Potbelly Shops or other restaurants using any part or all of the Branded System and/or Marks at "Non-Traditional Venues" within the Development Area, such as hospitals or medical centers, airports, public or private schools, universities or college campuses, airport terminals, train or bus stations, convention centers, exhibition halls, amusement parks, fairgrounds, sports arenas, military bases, state or national parks, hotels, lodges, country clubs, social clubs, resorts, casinos, theaters, food trucks, or any other similar site or venue that generates customer flow that is independent from the general customer traffic flow of the surrounding area (collectively, "Non-Traditional Venues");
(4) restaurants that we purchase (or as to which we purchase the rights as franchisor) that are part of another franchise system or chain, regardless of whether such restaurants are converted to operate using any of the Marks and/or any or all of the Branded System or whether such restaurants operate under other trademarks, service marks or trade dress and/or use other operating systems; or
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, during the term of the SDAA (Single Development Area Agreement), Potbelly Sandwich Works is obligated to grant the developer at least the cumulative number of franchises for Potbelly Shops set forth in Exhibit B, provided the developer is in compliance with the SDAA and all other agreements. These franchises are to be located within the geographical area described in Exhibit A, referred to as the "Development Area".
Potbelly Sandwich Works also agrees not to operate, either directly or through an affiliate, nor grant any third party the right to operate, any Potbelly Shop located within the Development Area. However, there are exceptions to this exclusivity. These exceptions include Potbelly Shops that the developer will develop under the SDAA, Potbelly Shops already open or under commitment to open as of the Effective Date of the agreement, and Potbelly Shops or other restaurants using the Branded System and/or Marks at "Non-Traditional Venues" such as hospitals, airports, schools, or food trucks within the Development Area.
Another exception includes restaurants that Potbelly Sandwich Works purchases (or acquires the rights to as a franchisor) that are part of another franchise system or chain. These restaurants can operate using the Potbelly Sandwich Works Marks and Branded System or under other trademarks and operating systems. These stipulations define the scope and limitations of the development rights granted to the developer under the SDAA, outlining both the obligations of Potbelly Sandwich Works and the exceptions to those obligations.