Can Potbelly Sandwich Works reduce any obligation of the developer under the SDAA?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
the event of a termination pursuant to Section 8.02(j).
- 8.03 Alternative Remedy Upon Default. In addition to, and without limiting, our other rights and remedies under this SDAA, any other agreement or applicable law, upon the occurrence of any event giving rise to our right to terminate this SDAA under the preceding Subsections 8.01 and 8.02, we may instead elect, at our sole option and upon delivering providing you written notice, to (1) operate or grant franchises to operate Potbelly Shops within the Development Area, in which case the restrictions on us or our Affiliates under Section 2 above will not apply to the Development Area; (2) grant you an extension under the Development Schedule for such time period and for a nonrefundable extension fee equal to the balance of the Initial Franchise Fees for the number of Potbelly Shops remaining to be opened under the Development Schedule; and/or (3) temporarily or permanently reduce the size of the Development Area, in which case the restrictions on us or our Affiliates under Section 2 above will not apply in any geographic area removed from the preceding territorial boundaries.
- 8.04 Cross-Default. Any default or breach by you (or any of your Owners) or your Affiliate (or any of your Owner's Affiliates) of any other agreement with us or our Affiliate will be considered an event of default under this SDAA, and any default or breach by you (or any of your Owners) of this SDAA (except for a default as a result of your failure to comply with the Development Schedule set forth in Exhibit B) will be considered an event of default or breach by you under any and all agreements between us or our Affiliate and you (or any of your Owners) or your Affiliate (or any of your Owner's Affiliates).
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, under the Development Agreement, Potbelly Sandwich Works has the option to grant an extension to the Development Schedule. This extension requires the developer to pay a nonrefundable extension fee. The fee is equivalent to the remaining balance of the Initial Franchise Fees for the number of Potbelly Shops yet to be opened under the original Development Schedule.
Additionally, Potbelly Sandwich Works can reduce the size of the Development Area. If Potbelly Sandwich Works reduces the Development Area, the restrictions on Potbelly Sandwich Works or its Affiliates will no longer apply to the removed geographic area. This means Potbelly Sandwich Works could then operate or franchise Potbelly Shops in that area without violating the Development Agreement.
Furthermore, Potbelly Sandwich Works may delay the developer's ability to develop additional Potbelly Shops if they believe the developer is not operationally, managerially, or otherwise prepared to develop, open, and/or operate the additional Potbelly Shops in full compliance with their standards and specifications. The delay will be for a time period that Potbelly Sandwich Works deems best.