Who is required to sign a Guaranty and Assumption of Obligations for a Potbelly Sandwich Works franchise?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
and their interests in you as of the Effective Date;
- (4) Each of your owners during the Term must sign a Guaranty and Assumption of Obligations, in the form attached at the end of this Agreement, undertaking personally to be bound, jointly and severally, by all provisions in this Agreement and any ancillary agreements between you and us. Subject to our rights and your obligations under Section 12, you and your owners agree to sign and deliver to us revised Exhibits A to reflect any permitted changes in the information that Exhibit A now contains;
- (5) You must appoint and maintain throughout this Agreement's term a shareholder, member, or partner, depending on the Entity, to be your "Managing Owner," responsible for overseeing and supervising operation of the Shop (defined in Subsection D below). The Managing Owner as of the Effective Date is identified in Exhibit A.
Source: Item 22 — CONTRACTS (FDD page 79)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, each owner of a Potbelly Sandwich Works franchise must sign a Guaranty and Assumption of Obligations. This agreement legally binds them, jointly and severally, to all the provisions outlined in the Franchise Agreement and any related ancillary agreements between the franchisee and Potbelly Sandwich Works. This requirement applies to all owners throughout the term of the agreement.
This means that if the franchisee is an entity such as a corporation or LLC, each individual who owns a stake in that entity must personally guarantee the franchise's obligations. This is a common practice in franchising, as it ensures that Potbelly Sandwich Works has recourse to the personal assets of the owners if the franchise fails to meet its financial or contractual obligations. The Guaranty and Assumption of Obligations form is attached to the end of the Franchise Agreement.
Additionally, in the event of a transfer of ownership, the transferee, or new owner, is also required to sign Potbelly Sandwich Works's current form of Guaranty and Assumption of Obligations. This ensures that the new owner is fully aware of and agrees to be bound by the obligations of the Franchise Agreement. Potbelly Sandwich Works retains the right to pre-approve the transfer of a non-controlling ownership interest, and the new owner must sign the Guaranty and Assumption of Obligations as part of the transfer process.