Are there any liens that the Potbelly Sandwich Works assets being transferred are subject to?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
- Section 2.02 Assets to be Transferred. Except as otherwise provided in Section 2.03, on the terms and subject to the conditions of this Agreement, at the Closing and effective as of the Effective Time, Seller shall sell, convey, assign and transfer to Purchaser all of Seller's right, title and interest in and to the following properties and assets that are used exclusively in connection with the Shops (collectively, the "Assets") free and clear of all Liens except for Permitted Liens:
"Permitted Liens" means (i) Liens for taxes or other governmental charges or levies that are not yet due or payable or that are being contested in good faith by appropriate proceedings, (ii) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen, repairmen and other Liens imposed by Law for amounts not yet due, (iii) zoning, building and other generally-applicable land-use restrictions, (iv) in the case of Assigned Contracts (or rights or interests therein), Liens arising from the terms of such Assigned Contracts, (v) Liens created by this Agreement or any of the other Transaction Agreements or any of the transactions contemplated hereby or thereby, (vi) Liens created by or arising from actions of Purchaser or any Guarantor,
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, when a franchisee purchases assets, the assets are transferred free and clear of all liens except for "Permitted Liens".
Permitted Liens include (i) liens for taxes or other governmental charges or levies that are not yet due or payable or that are being contested in good faith by appropriate proceedings, (ii) statutory liens of landlords and liens of carriers, warehousemen, mechanics, materialmen, repairmen and other liens imposed by Law for amounts not yet due, (iii) zoning, building and other generally-applicable land-use restrictions, (iv) in the case of Assigned Contracts (or rights or interests therein), liens arising from the terms of such Assigned Contracts, (v) liens created by the Asset Purchase Agreement, or (vi) liens created by or arising from actions of Purchaser or any Guarantor.
This means a new Potbelly Sandwich Works franchisee will not be responsible for any outstanding debts or encumbrances on the assets being purchased, except for the specific "Permitted Liens" outlined in the agreement. These exceptions generally cover common and unavoidable liens like taxes not yet due or standard landlord/contractor liens.