Does the Potbelly Sandwich Works SDAA allow for exceptions to the Competitive Business definition?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
guarantee our performance.
- 1.03 Your Representations. You and your Owners, if applicable, represent and warrant to us that: (a) neither you nor any of your Owners have made any untrue statement of any material fact or have omitted to state any material fact in obtaining the rights granted hereunder; (b) neither you nor any of your Owners have any direct or indirect legal or beneficial interest in any business that may be deemed a Competitive Business, except as otherwise fully and accurately disclosed in your franchise application submitted to us; and (c) the execution and performance of this SDAA will not violate any other agreement to which you or any of your Owners may be bound. You recognize that we have approved your franchise application in reliance on all of the statements you and your Owners have made in connection therewith.
- 1.04 Certain Definitions. The terms listed below have the meanings which follow them and include the plural as well as the singular. Other terms are defined elsewhere in this SDAA in the context in which they arise.
- "Affiliate" Any person or entity that directly or indirectly owns or controls the referenced party, that is directly or indirectly owned or controlled by the referenced party, or that is under common control with the referenced party. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whether through ownership of voting securities, by contract or otherwise.
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, the SDAA addresses potential exceptions to the definition of a "Competitive Business." Specifically, when applying for a franchise, prospective franchisees and their owners must disclose any existing legal or beneficial interest in a business that might be considered competitive. This disclosure is crucial because Potbelly Sandwich Works relies on the accuracy of these statements when approving a franchise application.
The definition of "Competitive Business" is broad, encompassing fast-casual restaurants that derive more than 20% of their revenue from specific types of sandwiches or frozen confection items, as well as businesses that franchise or license others to operate similar businesses. The document explicitly names several businesses, such as Blimpie, Subway and Panera Bread, as examples of Competitive Businesses.
This clause protects Potbelly Sandwich Works by ensuring that franchisees and their owners are not simultaneously involved in businesses that directly compete with the Potbelly Sandwich Works system. By requiring full disclosure and reserving the right to approve or reject franchise applications based on these disclosures, Potbelly Sandwich Works maintains control over potential conflicts of interest and protects its market position.