Is Potbelly Sandwich Works a third-party beneficiary of the non-disclosure agreements used by franchisees?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
You must take reasonable steps to prevent its improper disclosure to others and use non-disclosure agreements with those having access. We may review and pre-approve the forms of non-disclosure agreements you use and will be a third-party beneficiary of those agreements with independent enforcement rights. You must keep copies of these agreements and send them to us upon request. Our right to review and pre-approve non-disclosure agreements is solely to ensure that you adequately protect confidential information. Under no circumstances will we control the forms or terms of employment agreements you use with Shop employees or otherwise be responsible for your labor relations or employment practices.
Source: Item 14 — PATENTS, COPYRIGHTS, AND PROPRIETARY INFORMATION (FDD pages 54–55)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, Potbelly Sandwich Works has the right to be a third-party beneficiary of the non-disclosure agreements that franchisees use. Specifically, Potbelly Sandwich Works has the right to review and pre-approve the forms of non-disclosure agreements franchisees use with individuals who have access to the company's confidential information. This ensures that Potbelly Sandwich Works can adequately protect its confidential information.
As a third-party beneficiary, Potbelly Sandwich Works has independent enforcement rights, meaning it can directly enforce the terms of these agreements against individuals who violate them, even if Potbelly Sandwich Works is not a direct party to the agreement. Franchisees are required to keep copies of these agreements and provide them to Potbelly Sandwich Works upon request.
It is important to note that Potbelly Sandwich Works's right to review and pre-approve these agreements is solely to ensure the adequate protection of confidential information. The company does not control the forms or terms of employment agreements franchisees use with shop employees and is not responsible for franchisees' labor relations or employment practices. This distinction is important for franchisees to understand, as they retain control over their employment practices while also adhering to Potbelly Sandwich Works's requirements for protecting confidential information.