What is the transfer fee for a non-controlling ownership interest transfer with Potbelly Sandwich Works?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
fer satisfying all of this Subsection's requirements. We have the right to pre-approve the transfer of a non-controlling ownership interest in you or your owners (determined as of the date on which the proposed transfer will occur) other than to an Operator. We expect to approve such a transfer if the proposed transferee and its direct and indirect owners (if the transferee is an Entity) are of good character and meet our then applicable standards for Potbelly Shop franchisees (including no ownership interest in or performance of services for a Competitive Business), the new owner signs our Guaranty and Assumption of Obligations, and you pay us a transfer fee of Five Hundred Dollars ($500), which is due when you request transfer approval and is nonrefundable whether or not the transfer actually occurs. If the new owner of the non-controlling ownership interest (i) fails for any reason to sign the Guaranty and Assumption of Obligations, or (ii) would violate the Guaranty and Assumption of Obligations immediately upon its signing because of certain activities in which the new owner then engages or has engaged, or (iii) has engaged in any dishonest, unethical, immoral, or similar conduct as a result of which his or her association with you and the Shop could, in our reasonable opinion, have a material adverse effect on the goodwill associated with the Marks, the proposed transfer to the new owner may not take place despite
Source: Item 22 — CONTRACTS (FDD page 79)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, the transfer fee for a non-controlling ownership interest is $500. Potbelly Sandwich Works has the right to pre-approve the transfer of a non-controlling ownership interest. This fee is due when the franchisee requests transfer approval and is nonrefundable, regardless of whether the transfer occurs.
For a prospective franchisee, this means that if they plan to transfer a portion of their ownership that does not constitute a controlling interest, they will need to budget $500 for the transfer fee. It is important to note that even if the transfer is not ultimately approved, the fee will not be refunded. The franchisor also needs to pre-approve the transfer.
Potbelly Sandwich Works will likely approve the transfer if the proposed transferee meets the standards for Potbelly Shop franchisees, does not have an ownership interest or perform services for a competitive business, and signs a Guaranty and Assumption of Obligations. If the new owner fails to sign the Guaranty and Assumption of Obligations, violates the Guaranty and Assumption of Obligations, or has engaged in any dishonest, unethical, or immoral conduct, the transfer may not take place.