Can Potbelly Sandwich Works require a franchisee's participation in systemwide discount programs?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
You must offer and sell all Products and services we periodically require for Potbelly Shops. You may not offer or sell any unauthorized products or services. Our System Standards may regulate required and/or authorized Products, Potbelly Trade Secret Products, Potbelly Branded Products, and services; unauthorized and prohibited food and beverage products and services; and purchase, storage, preparation, handling, and packaging procedures and techniques, and inventory requirements, for Products, Potbelly Trade Secret Products, and Potbelly Branded Products. We always have the right to approve or disapprove in advance all items and services your Shop uses and sells. We may add new Products and services and withdraw our approval of previously-authorized Products and services. We expect to limit the range of Products your Shop may sell during its start-up phase (the duration of which we may determine) until we believe that your Shop is capable of preparing and selling the complete Potbelly Product line in compliance with System Standards. There are no limits on our rights described in this paragraph. We may regulate your Product prices to the extent the law allows, including restricting your use of coupons and other Product price discounting practices. We also may require your participation in systemwide discount programs.
Source: Item 16 — RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL (FDD page 57)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, franchisees may be required to participate in systemwide discount programs. The FDD states that Potbelly Sandwich Works may require franchisee participation in discount programs, giveaways, brand initiatives, and other promotions. These promotions are considered an integral part of the Potbelly Sandwich Works system, and franchisees must offer and participate in them at their own cost, following the franchisor's specifications. Franchisees are also expected to honor promotions offered by other Potbelly Shop franchise owners, provided it doesn't violate any laws.
This requirement extends to prices for the Shop's Products, including restrictions on the franchisee's use of coupons and other Product price discounting practices. Potbelly Sandwich Works can prescribe maximum and minimum retail prices, recommend retail prices, and mandate participation in marketing and promotional campaigns that impact retail prices. These activities can occur periodically or throughout the term of the agreement and may vary geographically or among different franchisee subsets.
This means that as a Potbelly Sandwich Works franchisee, you may have limited control over pricing and promotions, as the franchisor can mandate participation in system-wide initiatives. While this ensures consistency across the brand, it also means franchisees must factor in the cost of these promotions and discounts. Franchisees also irrevocably waive any claims arising from the franchisor's pricing or promotional decisions, acknowledging that these decisions may not always optimize individual shop profitability. Prospective franchisees should carefully consider the potential impact of these requirements on their shop's financial performance.