Under what circumstances must a Potbelly Sandwich Works franchisee appoint an 'Operator'?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
If your Managing Owner is not involved in the Shop's on-site, day-to-day operation, you also must appoint an "Operator," defined as an individual whom you hire to manage the Shop onsite on a day-to-day basis (or, if you operate more than one (1) Potbelly Shop, to oversee management and operation of all your Potbelly Shops), who reports to the Managing Owner, and who is eligible to participate in a long-term incentive plan (e.g., cash bonus or equity grant).
We must approve your proposed Operator, who must sign the form we require undertaking personally to be bound, jointly and severally, by the non-monetary obligations in this Agreement.
You may replace the Operator as you deem appropriate, although a replaced Operator must relinquish any ownership interest in you, a replacement Operator must satisfactorily complete our training requirements, and you must identify for us and we first must approve any new or replacement Operator.
Source: Item 22 — CONTRACTS (FDD page 79)
What This Means (2025 FDD)
According to Potbelly Sandwich Works' 2025 Franchise Disclosure Document, a franchisee must appoint an 'Operator' if the Managing Owner is not involved in the Shop's on-site, day-to-day operations. The Operator is defined as an individual hired to manage the Potbelly Sandwich Works shop on-site daily or, if the franchisee operates multiple locations, to oversee the management and operation of all Potbelly Sandwich Works shops. This Operator reports directly to the Managing Owner.
The appointed Operator must be eligible to participate in a long-term incentive plan, such as a cash bonus or equity grant. Potbelly Sandwich Works requires approval of the proposed Operator, who must also sign a form agreeing to be bound by the non-monetary obligations outlined in the Franchise Agreement. While franchisees can replace the Operator as needed, the replaced Operator must relinquish any ownership interest in the franchise, and any replacement Operator must complete Potbelly Sandwich Works' training requirements.
This requirement ensures that even if the Managing Owner is not directly involved in the daily operations, there is a designated and qualified individual overseeing the shop's activities and maintaining Potbelly Sandwich Works' standards. The Operator's role is crucial for maintaining consistent quality and service, especially when the Managing Owner has other responsibilities or business interests. The stipulation that the Operator be eligible for long-term incentives further aligns their interests with the success of the Potbelly Sandwich Works franchise.