Does Potbelly Sandwich Works have a right of first refusal regarding the transfer of a franchise?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
If you (and your owners) are in substantial compliance with this Agreement, then, subject to this Section 12's other provisions (including our right of first refusal under Subsection 12.G. below, if applicable), we will approve a transfer satisfying all of this Subsection's requirements.
Source: Item 22 — CONTRACTS (FDD page 79)
What This Means (2025 FDD)
According to Potbelly Sandwich Works' 2025 Franchise Disclosure Document, Potbelly Sandwich Works retains a right of first refusal regarding the transfer of a franchise. This means that before a franchisee can transfer their franchise to a third party, Potbelly Sandwich Works has the option to purchase the franchise on the same terms offered by the third party.
The FDD specifies that if a franchisee is in substantial compliance with the franchise agreement, Potbelly Sandwich Works will approve a transfer that meets all requirements, subject to their right of first refusal. This right is mentioned in the context of conditions for approval of transfer, indicating its importance in the transfer process.
For a prospective franchisee, this right of first refusal means that even if they find a suitable buyer for their Potbelly Sandwich Works franchise, the franchisor has the ultimate say in who becomes the new franchisee. Potbelly Sandwich Works can step in and purchase the franchise themselves, potentially delaying or preventing the sale to the franchisee's preferred buyer. It is important for franchisees to understand this clause and its implications when considering selling their franchise.