What is the ownership interest range that Potbelly Sandwich Works has in its consolidated joint ventures?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company's consolidated financial statements include the accounts of Potbelly; its wholly-owned subsidiary, Potbelly Illinois, Inc. ("PII"); PII's wholly-owned subsidiaries, Potbelly Franchising, LLC and Potbelly Sandwich Works, LLC ("PSW"); seven of PSW's wholly-owned subsidiaries and PSW's six joint ventures, collectively, the "Company." All intercompany balances and transactions have been eliminated in consolidation. For our six consolidated joint ventures, "non-controlling interest" represents the non-controlling partner's share of the assets, liabilities and operations related to the joint venture investments. Potbelly has ownership interests ranging from 51-80% in these consolidated joint ventures.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 37–49)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, the company has ownership interests ranging from 51% to 80% in its six consolidated joint ventures. These joint ventures are included in the company's consolidated financial statements, with "non-controlling interest" representing the non-controlling partner's share of the assets, liabilities, and operations related to these investments. This consolidation means that Potbelly Sandwich Works includes the financial results of these joint ventures in its overall financial reporting.
For a prospective franchisee, this information provides insight into how Potbelly Sandwich Works structures some of its business operations. The fact that Potbelly Sandwich Works maintains a majority ownership in these joint ventures (ranging from 51% to 80%) suggests that it retains significant control over their operations and financial outcomes. However, it also implies that Potbelly Sandwich Works shares both the risks and rewards of these ventures with its partners, as the non-controlling partner has a stake in the assets, liabilities, and operations.
It's important to note that the financial performance of these joint ventures is incorporated into Potbelly Sandwich Works's overall financial statements. This could impact various financial metrics and ratios that potential investors or franchisees might consider when evaluating the company. Understanding the nature and performance of these joint ventures can provide a more comprehensive view of Potbelly Sandwich Works's financial health and operational strategy.
Prospective franchisees might want to inquire further about the specific nature of these joint ventures, their geographical locations, and their individual financial performance to gain a deeper understanding of their impact on Potbelly Sandwich Works's overall business. Additionally, understanding the terms of the joint venture agreements and the roles and responsibilities of each partner could provide valuable insights into the operational dynamics and potential risks and rewards associated with these ventures.