Does Potbelly Sandwich Works have the right to terminate the franchise agreement without cause?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | SECTION IN FRANCHISE OR OTHER AGREEMENT | SUMMARY |
|---|---|---|
| d. | Termination by franchisee | 14.A. of Franchise Agreement; not applicable to SDAA |
| e. | Termination by franchisor without cause | Not Applicable |
| f. | Termination by franchisor with cause | 14.B. of Franchise Agreement and Sections 8.01, 8.02 and 8.04 of SDAA |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 58–65)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, Potbelly Sandwich Works does not have the right to terminate the franchise agreement without cause. Item 17 details the conditions for renewal, termination, transfer, and dispute resolution. Specifically, the table outlines various provisions related to termination, noting whether they are applicable to the Franchise Agreement or the SDAA (Supplemental Development Area Agreement).
The table includes a row explicitly addressing termination by the franchisor without cause. The 'SUMMARY' column is left blank, indicating that this type of termination is 'Not Applicable'. This means that Potbelly Sandwich Works can only terminate the franchise agreement if there is a valid cause, such as a breach of contract by the franchisee.
For a prospective franchisee, this is a favorable term. It provides some security, knowing that Potbelly Sandwich Works cannot arbitrarily terminate the agreement. The franchisee must violate the terms of the agreement to warrant termination, and many of these violations may be curable, giving the franchisee an opportunity to correct the issue. This contrasts with some franchise agreements that allow termination without cause, which can leave franchisees vulnerable.