What is the significance of the 'Closing Date' in relation to Potbelly Sandwich Works' representations and warranties?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
ARTICLE IX.
CONDITIONS TO OBLIGATIONS OF PURCHASER
Each and every obligation of Purchaser under this Agreement to be performed at the Closing shall be subject to the satisfaction, on or before the Closing Date, of each of the following conditions, unless waived in writing by Purchaser at its sole discretion:
- Section 9.01 Representations and Warranties True. The representations and warranties of Seller contained herein shall, taken as a whole, be true, complete and accurate in all material respects as of the date of this Agreement and at and as of the Closing Date as though such representations and warranties were made at and as of such date (other than representations and warranties made as of another stated date, which representations and warranties shall have been true, complete and accurate in all material respects as of such date).
- Section 9.02 Performance. Seller shall have performed, delivered and complied with all agreements, obligations and conditions required by this Agreement to be performed, delivered or complied with by it on or prior to the Closing Date.
- Section 9.03 No Injunction, Etc. On the Closing Date, (a) there shall be no effective Order of any nature issued or threatened by a court or other Governmental Authority of competent jurisdiction directing that any of the transactions provided for herein may not be consummated as so provided or imposing any conditions on the consummation of the transactions contemplated hereby, and (b) no Action shall be pending before any such court or other Governmental Authority seeking such relief.
- Section 9.04 Franchise Approval. Potbelly Franchising, LLC shall have granted to Purchaser the franchise rights to operate the Shops.
- Section 9.05 Closing Deliverables.
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
According to Potbelly Sandwich Works' 2025 Franchise Disclosure Document, the 'Closing Date' is a critical point for assessing the accuracy and validity of the representations and warranties made by both the seller (Potbelly Sandwich Works, LLC) and the purchaser in the Asset Purchase Agreement. The obligations of the purchaser to proceed with the closing are contingent upon the seller's representations and warranties being true, complete, and accurate in all material respects, both on the date of the agreement and as of the Closing Date. This means that a prospective Potbelly Sandwich Works franchisee (as purchaser) needs to verify that all information provided by Potbelly Sandwich Works (as seller) remains accurate up to the moment the transaction is finalized.
Specifically, Section 9.01 states that the purchaser's obligations are subject to the seller's representations and warranties being true, complete, and accurate on the date of the agreement and at the Closing Date. Similarly, Section 8.01 stipulates that the seller's obligations are subject to the purchaser's and guarantor's representations and warranties being true on these dates. This dual requirement ensures that both parties are held accountable for the information they provide throughout the transaction process. Any material changes or inaccuracies discovered before the Closing Date could potentially allow the purchaser to withdraw from the agreement, unless the purchaser chooses to waive the condition in writing.
Furthermore, the representations and warranties generally survive the closing for a limited period, known as the "Survival Period," which is typically 18 months, except for environmental matters which have a longer survival period. This means that even after the transaction is complete, both Potbelly Sandwich Works and the purchaser can be held liable for breaches of their respective representations and warranties if a claim is made within the specified survival period. The Closing Date, therefore, serves as an essential benchmark for determining the ongoing accuracy and reliability of the information provided by both parties, impacting their potential liabilities and obligations long after the transaction is concluded. A prospective franchisee should pay close attention to these clauses and conduct thorough due diligence to ensure all representations are accurate as of the Closing Date.