When are the pre-opening costs for a Potbelly Sandwich Works shop expensed?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
Pre-opening costs consist of costs incurred prior to opening a new shop and are made up primarily of travel, employee payroll and training costs incurred prior to the shop opening, as well as occupancy costs incurred from when we take site possession to shop opening. Shop pre-opening costs are expensed as incurred.
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, pre-opening costs are expensed as incurred. These costs include expenses the franchisee incurs before opening a new shop. These costs are primarily travel, employee payroll, and training costs incurred before the shop opens, as well as occupancy costs from when Potbelly Sandwich Works takes site possession to the shop opening.
This means that franchisees should anticipate these expenses impacting their financial statements immediately rather than being capitalized and depreciated over time. Expensing these costs as incurred provides a more immediate reflection of the financial impact of opening a new Potbelly Sandwich Works location.
Understanding this accounting practice is crucial for prospective franchisees as they plan their initial investment and project their profitability. It is important to factor in these immediate expenses when assessing the financial viability of a Potbelly Sandwich Works franchise.