What state's laws govern the Potbelly Sandwich Works agreement?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
Section 12.05 Governing Law. THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY, AND ALL CLAIMS AND DEFENSES ARISING OUT OF OR RELATING TO ANY SUCH TRANSACTION OR THIS AGREEMENT OR THE FORMATION, BREACH, TERMINATION OR VALIDITY OF ANY PART OF THIS AGREEMENT, SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAW PRINCIPLES OF SUCH STATE THAT WOULD APPLY THE LAWS OF ANOTHER JURISDICTION.
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, the franchise agreement is governed by the laws of Illinois. This means that any disputes or legal matters arising from the franchise agreement will be interpreted and resolved according to Illinois state law, without regard to its conflict of law principles. This is a standard clause in franchise agreements, as it provides clarity and predictability regarding the legal framework that will be applied.
For a prospective franchisee, this clause means that they may need to familiarize themselves with Illinois law, or consult with legal counsel familiar with Illinois law, to fully understand their rights and obligations under the franchise agreement. It also means that if a lawsuit is filed, it will likely be heard in Illinois, which could involve additional travel and expense for a franchisee located outside of Illinois.
However, the FDD also includes riders for franchisees in certain states like California and Washington, which contain state-specific provisions that may supersede the general governing law clause in certain situations. For example, the Washington rider states that the provisions of the Washington Franchise Investment Protection Act will prevail in the event of a conflict of laws. Therefore, franchisees should carefully review any state-specific addenda to the franchise agreement to understand how the governing law clause may be modified or supplemented by local laws.