What is the significance of Exhibit B in relation to the grant of franchises for Potbelly Sandwich Works?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
you sign the franchise agreement for the Potbelly Shop.
2.03 Development Rights. During the Term, and provided you and your Affiliates are in compliance with this SDAA and all other agreements with us or any of our Affiliates (including franchise agreements signed pursuant to this SDAA), then we will:
(a) grant to you, in accordance with Section 3, at least that cumulative number of franchises for Potbelly Shops set forth in Exhibit B, all of which are to be located within the geographical area described in Exhibit A (the "Development Area" or "Area"); and
(b) neither operate (directly or through an Affiliate), nor grant any third party the right to operate, any Potbelly Shop located within the Development Area, except for:
(1) Potbelly Shops you will develop pursuant to this SDAA for which you or your Affiliate will sign future franchise agreements for each such location;
(2) Potbelly Shops already open (or under commitment to open) as of the Effective Date;
(3) Potbelly Shops or other restaurants using any part or all of the Branded System and/or Marks at "Non-Traditional Venues" within the Development Area, such as hospitals or medical centers, airports, public or private schools, universities or college campuses, airport terminals, train or bus stations, convention centers, exhibition halls, amusement parks, fairgrounds, sports arenas, military bases, state or national parks, hotels, lodges, country clubs, social clubs, resorts, casinos, theaters, food trucks, or any other similar site or venue that generates customer flow that is independent from the general customer traffic flow of the surrounding area (collectively, "Non-Traditional Venues");
(4) restaurants that we purchase (or as to which we purchase the rights as franchisor) that are part of another franchise system or chain, regardless of whether such restaurants are converted to operate using any of the Marks and/or any or all of the Branded System or whether such restaurants operate under other trademarks, service marks or trade dress and/or use other operating systems;
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
According to Potbelly Sandwich Works' 2025 Franchise Disclosure Document, Exhibit B, referred to as the "Development Schedule," is a crucial component of the Area Development Agreement. It outlines the specific number of Potbelly Sandwich Works shops the franchisee is obligated to open within the designated Development Area and the corresponding dates or timelines for these openings. This schedule sets clear expectations for the franchisee's development obligations during the term of the agreement.
The franchisee commits to exert their best efforts to fully develop the market potential for Potbelly Sandwich Works shops within their designated area. This commitment is formalized through the franchise agreements they sign, which specify the incremental and total cumulative number of shops to be opened according to the timelines in Exhibit B. Failing to meet these development obligations can have consequences, as Potbelly Sandwich Works retains the right to delay further development if they believe the franchisee is not adequately prepared to meet the brand's standards.
Potbelly Sandwich Works may delay additional development for a period they deem appropriate, provided that this delay does not cause the franchisee to breach their development obligations under the Development Schedule. This flexibility allows Potbelly Sandwich Works to ensure that new locations are opened and operated in full compliance with their standards and specifications, safeguarding the brand's reputation and consistency. Prospective franchisees should carefully review Exhibit B to understand the specific development requirements and timelines associated with their franchise agreement.