What are the requirements for a proposed 'Operator' of a Potbelly Sandwich Works franchise to be approved?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
If you are a legal entity, you must appoint a shareholder, member or partner (as applicable) to be your "Managing Owner," responsible for overseeing and supervising the Shop's operation. If your Managing Owner will not be involved in the Shop's on-site, day-to-day operation, you also must appoint an "Operator," an individual whom you hire to manage the Shop on an on-site, dayto-day basis (or, if you operate more than one Potbelly Shop, to oversee management and operation of all your Potbelly Shops), who reports to the Managing Owner, who is eligible to participate in a long-term incentive plan (i.e., cash bonus or equity grant), and who completes the applicable training requirements. We must approve your proposed Operator, who must sign our Principal's Agreement (see below). You may replace any Operator, although that person must give up his or her ownership interest in you, a replacement Operator must complete training to our satisfaction, and you must identify and we first must approve any new or replacement Operator. Your Shop always must have on staff at least 3 fully trained, certified key-holding supervisory employees, including a Managing Owner and a General Manager, so that the quality of the Products and the Potbelly brand is maintained.
Your on-site key-holding supervisory employees (including a General Manager) need not have an equity interest in the Shop or you but must agree in writing to preserve confidential information to which they have access. We may regulate the form of agreement you use and be a third party beneficiary of that agreement with independent enforcement rights. Our right to review and pre-approve the agreement is solely to ensure that you adequately protect confidential information. Under no circumstances will we control the forms or terms of employment agreements you use with Shop employees or otherwise be responsible for your labor relations or employment practices.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 56–57)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, if a franchisee is a legal entity and their Managing Owner will not be involved in the Shop's on-site, day-to-day operation, they must appoint an 'Operator' to manage the Shop. This Operator reports to the Managing Owner and may be eligible for a long-term incentive plan such as a cash bonus or equity grant.
Potbelly Sandwich Works must approve the proposed Operator, and the Operator must sign the Principal's Agreement. While a franchisee can replace an Operator, that person must give up their ownership interest in the franchise. Any replacement Operator must complete training to Potbelly Sandwich Works's satisfaction, and Potbelly Sandwich Works must first approve any new or replacement Operator.
In addition to the Operator, each Potbelly Sandwich Works location must have at least three fully trained, certified key-holding supervisory employees on staff, including a Managing Owner and a General Manager, to maintain product quality and brand standards. These on-site key-holding supervisory employees, including the General Manager, do not need to have an equity interest in the Shop but must agree in writing to preserve confidential information. Potbelly Sandwich Works may regulate the form of agreement used and be a third-party beneficiary of that agreement with independent enforcement rights to ensure adequate protection of confidential information.