What personnel of a Potbelly Sandwich Works franchise are required to sign noncompetition covenants?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
Your officers, directors, Operator, General Managers, and key-holding supervisory employees must sign reasonable noncompetition covenants appropriate for their positions to protect Confidential Information and the competitiveness of Potbelly Shops. We have the right to review and pre-approve the forms of non-competition covenants you use and to be a third-party beneficiary of those covenants with independent enforcement rights. You must send us copies upon request. Under no circumstances will we control the forms or terms of employment agreements you use with Shop employees or otherwise be responsible for your labor relations or employment practices. To give effect to your obligations in this Section 7, you acknowledge that neither you, any of your direct or indirect owners, nor any of such owners' spouses will seek to violate this Section 7 directly or through any other person (as defined in Subsection 17.L.) with whom you or any of the other restricted parties are acting in concert or participating in connection with the prohibited activities. We may enforce this Section 7 by taking action against you, the other restricted parties, and all other persons with whom you are acting in concert or participating in connection with the prohibited activities.
Source: Item 22 — CONTRACTS (FDD page 79)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, certain personnel are required to sign noncompetition covenants to protect confidential information and the competitiveness of Potbelly Shops. Specifically, the franchisee's officers, directors, Operator, General Managers, and key-holding supervisory employees must sign these agreements.
Potbelly Sandwich Works retains the right to review and pre-approve the forms of non-competition covenants used by the franchisee. Additionally, Potbelly Sandwich Works is a third-party beneficiary of these covenants, granting them independent enforcement rights. Franchisees are required to provide copies of these covenants to Potbelly Sandwich Works upon request.
The FDD emphasizes that Potbelly Sandwich Works will not control the forms or terms of employment agreements used with shop employees, nor will they be responsible for the franchisee's labor relations or employment practices. This indicates that while certain key personnel must sign noncompetition agreements, the overall employment relationship remains the responsibility of the franchisee, typical of most franchise systems.