Can Potbelly Sandwich Works unilaterally waive an obligation of the developer under the SDAA?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition to our other rights and remedies under this SDAA and applicable law, we may delay your development of additional Potbelly Shops within the Area for the time period we deem best if we believe in our sole judgment, that you (or your Affiliate) are not yet operationally, managerially, or otherwise prepared, due to the particular amount of time that has elapsed since you (or your Affiliate) developed and opened your most recent Potbelly Shop, to develop, open and/or operate the additional Potbelly Shops in full compliance with our standards and specifications.
We may delay additional development for the time period we deem best as long as the delay will not in our reasonable opinion cause you to breach your development obligations under the Development Schedule (unless we are willing to extend the Development Schedule proportionately to account for the delay).
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, Potbelly Sandwich Works retains significant rights and discretion regarding the enforcement and modification of the Store Development Area Agreement (SDAA). While the document does not explicitly state that Potbelly Sandwich Works can unilaterally waive a developer's obligation, it outlines several scenarios where Potbelly Sandwich Works can alter the developer's obligations or the terms of the SDAA.
Specifically, Potbelly Sandwich Works may delay a developer's schedule if they believe the developer is not prepared to meet Potbelly Sandwich Works' standards. Potbelly Sandwich Works can delay additional development for the time period they deem best as long as the delay will not in their reasonable opinion cause you to breach your development obligations under the Development Schedule (unless we are willing to extend the Development Schedule proportionately to account for the delay). Additionally, Potbelly Sandwich Works has the option to offer an extension to the development schedule for a nonrefundable fee equal to the balance of the Initial Franchise Fees for the number of Potbelly Shops remaining to be opened under the Development Schedule. Potbelly Sandwich Works also has the option to reduce the size of the Development Area.
Furthermore, the SDAA emphasizes that time is of the essence and that Potbelly Sandwich Works may strictly enforce the agreement. However, the agreement also includes a covenant of good faith, which implies that Potbelly Sandwich Works' decisions should be made in consideration of their interests balanced against the interests of Potbelly Shop developers and franchise owners generally, without specifically considering any individual interests. The document indicates that modifications to the SDAA must be made through a written agreement signed by both parties. Therefore, while Potbelly Sandwich Works has considerable latitude in managing the development process and enforcing the SDAA, the ability to unilaterally waive a developer's obligation is not explicitly granted and may be subject to the covenant of good faith and the requirement for written modifications.