When is the transfer fee of $500 due to Potbelly Sandwich Works?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
HOLLY-OWNED CORPORATION OR LIMITED LIABILITY COMPANY.
Despite Subsection C above, if you are in substantial compliance with this Agreement, you may transfer this Agreement to another Entity conducting no business other than the Shop and, if applicable, other Potbelly Shops, in which your current owners maintain management control, and of which you and/or your current owners own and control one hundred percent (100%) of the equity and voting power of all issued and outstanding ownership interests, provided that all of the Shop's assets are owned, and the Shop's business is conducted, only by that single Entity. The Entity must expressly assume all of your obligations under this Agreement. Transfers of ownership interests in the Entity are subject to Subsections B and C above. You will remain liable under this Agreement as if the transfer to the Entity did not occur. You must immediately give us all
information regarding the Entity that we request and pay us with your transfer request (before the transfer will be deemed
Source: Item 22 — CONTRACTS (FDD page 79)
What This Means (2025 FDD)
According to Potbelly Sandwich Works' 2025 Franchise Disclosure Document, a $500 transfer fee is due when a franchisee requests transfer approval for a non-controlling ownership interest. This fee is nonrefundable, regardless of whether the transfer is ultimately completed. This condition applies when the franchisee is in substantial compliance with the franchise agreement and seeks to transfer a non-controlling ownership interest to a new owner.
Potbelly Sandwich Works retains the right to pre-approve the transfer, assessing the character and standards of the proposed transferee. The new owner must also sign a Guaranty and Assumption of Obligations. If the new owner fails to meet these requirements or engages in conduct that could adversely affect the goodwill associated with the Potbelly Sandwich Works brand, the transfer may be denied.
This requirement ensures that Potbelly Sandwich Works maintains control over who becomes involved in the franchise, even in a non-controlling capacity. The non-refundable nature of the fee means that franchisees must be certain of their intentions and the transferee's qualifications before submitting the transfer request, as the fee will not be returned even if the transfer does not proceed.