What is the purpose of the 'Development Agreement' between the seller and purchaser of a Potbelly Sandwich Works franchise?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) a duly-executed counterpart of each of the Assignments, Subleases and/or Management Agreement, as applicable, and/or a duly-executed guaranty of same in the form attached thereto;
- (b) a duly-executed counterpart of the General Release;
- (c) a duly-executed counterpart of the Development Agreement;
- (d) duly-executed Franchise Documents; and
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
According to the 2025 Potbelly Sandwich Works FDD, a Development Agreement is part of the asset purchase agreement when transferring ownership of existing shops. Specifically, the purchaser is required to provide a duly-executed counterpart of the Development Agreement to the seller as part of the closing documents. This agreement is one of several documents, including assignments, subleases, management agreements, a general release, and franchise documents, needed to finalize the asset purchase.
The Development Agreement ensures that the purchaser commits to developing a specific number of Potbelly Sandwich Works locations within a defined geographic area. Potbelly Sandwich Works, in turn, agrees not to operate or grant others the right to operate shops within that area, with some exceptions. These exceptions include existing shops, shops at non-traditional venues like airports or hospitals, and restaurants acquired from other franchise systems.
For a prospective Potbelly Sandwich Works franchisee, the Development Agreement outlines the rights and responsibilities related to expanding the brand's presence in a specific territory. It provides a degree of exclusivity, but also sets expectations for the franchisee to develop a certain number of locations. This agreement is crucial for franchisees looking to grow their business and for Potbelly Sandwich Works to strategically manage its expansion.