What does Potbelly Sandwich Works use the Production Fees for?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
You must pay us a production fee (the "Production Fee") equal to one percent (1%) of the Shop's Gross Sales. Said Production Fee will be payable in the same manner as the Royalty. We will use Production Fees to create, prepare, and produce video, audio, and written materials, graphics, and Electronic Media for Potbelly Shops; develop a Franchise System Website, Intranet and/or related strategies; conduct research; hire advertising, promotion, CRM, marketing, graphic design, and research agencies, other advisors, and personnel to provide assistance; support market research, customer satisfaction surveys, and other advertising promotion, CRM, marketing, graphic design, and research activities for Potbelly Shops; and pay third party vendors to customize advertising, promotion, CRM,, and marketing materials for in-Shop and local use by franchisees.
We have sole control over how and where to spend Production Fees. We will give you, at no additional cost, one set of Marketing materials that we consider to be standard for a franchised Potbelly Shop. If you want additional supplies of these Marketing materials, you must pay us an amount equal to their direct production cost plus any related shipping, handling, and storage charges. We need not ensure that any Potbelly Shop benefits directly or in proportion to its Production Fees from the creation and development of Marketing Materials.
Source: Item 22 — CONTRACTS (FDD page 79)
What This Means (2025 FDD)
According to Potbelly Sandwich Works' 2025 Franchise Disclosure Document, franchisees must pay a Production Fee of 1% of the Shop's Gross Sales, payable in the same manner as the Royalty fee. Potbelly Sandwich Works uses these Production Fees for several purposes related to marketing and brand development. These include creating video, audio, and written materials, graphics, and Electronic Media for Potbelly Shops. They also use the fees to develop a Franchise System Website, Intranet, and related strategies.
Additionally, Potbelly Sandwich Works uses the Production Fees to conduct research and hire advertising, promotion, CRM, marketing, graphic design, and research agencies, along with other advisors and personnel to provide assistance. The fees also support market research, customer satisfaction surveys, and other advertising, promotion, CRM, marketing, graphic design, and research activities for Potbelly Shops. Furthermore, Potbelly Sandwich Works uses the fees to pay third-party vendors to customize advertising, promotion, CRM, and marketing materials for in-Shop and local use by franchisees.
Potbelly Sandwich Works maintains sole control over how and where the Production Fees are spent. Franchisees receive one set of standard marketing materials at no additional cost. However, if a franchisee wants additional supplies of these materials, they must pay the direct production cost plus any related shipping, handling, and storage charges. It's important to note that Potbelly Sandwich Works does not guarantee that any particular Potbelly Shop will directly benefit from the marketing materials in proportion to the Production Fees it pays.