Under what circumstances will Potbelly Sandwich Works refund the Development Fee?

According to Potbelly Sandwich Works' 2025 Franchise Disclosure Document, the Development Fee is generally non-refundable. The standard Development Fee is $40,000 for the first Potbelly Shop and $20,000 for each additional shop under the agreement. This fee compensates Potbelly Sandwich Works for administrative expenses and lost development opportunities.

However, there is one specific circumstance under which a refund of the unapplied portion of the Development Fee may occur. If the agreement is terminated pursuant to Section 8.02(j), Potbelly Sandwich Works will refund the unapplied portion of the Development Fee paid under Section 2.02. Section 8.02(j) refers to a situation where new federal or state legislation, regulation, or rule enacted or amended after the agreement's effective date adversely affects Potbelly Sandwich Works' rights, remedies, or discretion in franchising Potbelly Shops.

In practical terms, this means that a franchisee should not expect a refund of the Development Fee under most circumstances. The only exception is if a change in laws or regulations significantly harms Potbelly Sandwich Works' ability to franchise, leading to a termination of the agreement. Franchisees should be aware of this limited refund condition and factor it into their investment decision, understanding that the Development Fee is typically non-refundable once paid.