What is the purpose of the Area Cooperative for Potbelly Sandwich Works?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
Each Area Cooperative will be organized and governed in a form and manner, and begin operating on a date, that we determine in advance. Each Area Cooperative's purpose is, with our approval, to administer advertising programs and develop promotional materials for the area the Area Cooperative covers.
If an Area Cooperative is or has been established, you agree (1) to join, participate in, sign the documents we require to become a member of, and actively support the Area Cooperative in compliance with its governing documents, and (2) to contribute a specific percentage of the Shop's Total Revenue to the Area Cooperative. The maximum Area Cooperative contribution during a fiscal period may not exceed the then-currently-designated Local Marketing Spend. Area Cooperative contributions will be credited toward your Local Marketing Spend (but not toward the Brand Fund contribution). If Potbelly Shops operated by us and our affiliates are members of the Area Cooperative, they will contribute a proportionate amount of their Total Revenue to the Area Cooperative's expenses.
The Area Cooperative must, by the deadlines we specify, present to us annually (or on the quarterly or other basis we specify) for our prior written approval its plan for use of Area Cooperative contributions in the upcoming year (or quarter or other timeframe). The Area Cooperative will present a Marketing plan having the approval of at least fifty-one percent (51%) of the Potbelly Shops that are members of the Area Cooperative. After we have approved the plan, the Area Cooperative may propose for our prior written approval a change in the percentage of Total Revenue to be contributed by Potbelly Shops for the plan. If we approve that change (although we have no obligation to do so), the Area Cooperative may implement that change only if at least seventy percent (70%) of the Potbelly Shops that are members of the Area Cooperative vote for the change. (As noted above, your minimum required expenditures under Sections 9.B., 9.C., and 9.D. will not exceed, in the aggregate, five percent (5%) of the Shop's Total Revenue. We may, upon ninety (90) days' prior notice to you, adjust the percentages among the various required expenditures throughout the Term.)
Source: Item 22 — CONTRACTS (FDD page 79)
What This Means (2025 FDD)
According to the 2025 Potbelly Sandwich Works FDD, the purpose of each Area Cooperative is to administer advertising programs and develop promotional materials for the area it covers, with the franchisor's approval. Potbelly Sandwich Works determines the organization, governance, and start date of each Area Cooperative.
If an Area Cooperative is established, franchisees must join, participate, and actively support it according to its governing documents. Franchisees are also required to contribute a percentage of their Shop's Total Revenue to the Area Cooperative, up to the Local Marketing Spend limit. These contributions are credited toward the franchisee's Local Marketing Spend but not toward the Brand Fund contribution. If Potbelly Sandwich Works or its affiliates operate Shops within the Area Cooperative, they will contribute a proportionate amount of their Total Revenue to cover the Area Cooperative's expenses.
The Area Cooperative must present an annual marketing plan (or quarterly or other basis) for Potbelly Sandwich Works's approval, with the plan having the approval of at least 51% of the Potbelly Shops that are members of the Area Cooperative. After approval, any changes to the contribution percentage from Total Revenue require approval from Potbelly Sandwich Works and a 70% vote in favor of the change from the Potbelly Shops that are members of the Area Cooperative. The franchisee's minimum required expenditures under Sections 9.B., 9.C., and 9.D. will not exceed, in the aggregate, five percent (5%) of the Shop's Total Revenue. Potbelly Sandwich Works may adjust the percentages among the various required expenditures throughout the Term with ninety (90) days' prior notice.