Does the SDAA between Potbelly Sandwich Works and the developer create a fiduciary relationship?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
Neither this SDAA nor the dealings of the parties pursuant to this SDAA shall create any fiduciary relationship or any other relationship of trust or confidence. Franchisor and Developer, as between themselves, are and shall be independent contractors. Nothing contained in this SDAA, or arising from the conduct of the parties hereunder, is intended to make either party a general or special agent, joint venturer, partner or employee of the other for any purpose whatsoever. You must conspicuously identify yourself in all dealings with customers, lessors, contractors, suppliers, public officials, personnel and others as the owner of development rights granted hereunder and must place such other notices of independent ownership on such forms, business cards, stationery, advertising and other materials as we require at any time and from time to time.
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 (Shop Development Area Agreement) between the Franchisor and the Developer does not create a fiduciary relationship. The document explicitly states that the parties are independent contractors. This means that neither party owes the other the heightened duties of care and loyalty that are characteristic of a fiduciary relationship.
This distinction is important for prospective Potbelly Sandwich Works developers because it clarifies the nature of the legal relationship. As independent contractors, both Potbelly Sandwich Works and the developer are responsible for their own actions and liabilities. The developer must also identify themselves as the owner of the development rights in all dealings with customers, lessors, and other parties.
Furthermore, the agreement specifies that nothing within it is intended to make either party a general or special agent, joint venturer, partner, or employee of the other for any purpose. This reinforces the independent nature of the relationship and limits the potential for either party to be held liable for the actions of the other. This is a fairly standard clause in franchise agreements, as franchisors generally seek to maintain an arm's-length relationship with their franchisees and developers.