Under the Potbelly Sandwich Works guarantee, what are considered the 'Guaranteed Obligations'?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
- (c) Without limitation to the foregoing, Guarantor further agrees that its guarantee is a continuing guarantee of payment and performance of the Guaranteed
Obligations when due (whether or not any bankruptcy, insolvency or similar proceeding under applicable Law shall have stayed the accrual or collection of any of the Guaranteed Obligations or operated as a discharge thereof) and not of collection, and waives any right to require that resort be had by Seller to the Purchaser for the collection and performance of the Guaranteed Obligations. If at any time any payment of any Guaranteed Obligation by Purchaser is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of Purchaser or otherwise, Guarantor's obligations hereunder with respect to such payment shall be reinstated at such time as though such payment had been due but not made at such time.
(d) Guarantor shall indemnify and reimburse Seller for any and all costs and expenses (including reasonable attorneys' fees) incurred by Seller in enforcing any rights under this Section 12.16.
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the guarantor for a Potbelly Sandwich Works franchise provides a continuing guarantee of payment and performance of the 'Guaranteed Obligations'. This means the guarantor is responsible for ensuring these obligations are fulfilled when due, regardless of any bankruptcy, insolvency, or similar legal proceedings affecting the purchaser. This guarantee is not merely a guarantee of collection, but of actual payment and performance.
Specifically, the guarantor waives certain legal rights, including the right to require the seller (Potbelly Sandwich Works) to first pursue action against the purchaser before seeking fulfillment from the guarantor. If any payment made by the purchaser is rescinded or returned due to insolvency or bankruptcy, the guarantor's obligations are reinstated as if the payment was never made.
Furthermore, the guarantor is responsible for covering any costs and expenses, including reasonable attorney's fees, that Potbelly Sandwich Works incurs while enforcing its rights under this guarantee. This underscores the comprehensive nature of the guarantee, placing a significant financial responsibility on the guarantor to ensure all obligations are met.