What is Potbelly Sandwich Works required to maintain compliance with under the Credit Agreement?

According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, the company is obligated to maintain compliance with certain financial benchmarks as part of its Credit Agreement. These requirements include adhering to minimum fixed charge coverage ratios and maximum consolidated leverage ratios, as specifically defined within the Credit Agreement itself.

In addition to these financial covenants, the Credit Agreement places restrictions on Potbelly Sandwich Works's ability to undertake various corporate actions. These restrictions cover a range of activities, including incurring certain types of debt and liens, engaging in mergers, consolidations, or other significant organizational changes, making specific investments, disposing of assets or making acquisitions, entering into sale and leaseback transactions or swap transactions, making restricted payments such as dividends or stock repurchases, engaging in transactions with affiliates, entering into certain types of restricted agreements, altering organizational documents or debt agreements, and using the proceeds from the Revolving Commitments for unapproved purposes.

These covenants and restrictions are typical in credit agreements of this nature, as they provide the lenders with assurances regarding the financial stability and operational conduct of Potbelly Sandwich Works. For a potential franchisee, this indicates that Potbelly Sandwich Works's financial activities are subject to external oversight and control, which could impact the company's strategic decisions and resource allocation. However, the document states that Potbelly Sandwich Works has been in compliance with all terms and covenants since the execution of the Credit Agreement.