Potbelly Sandwich Franchise Costs $595K – $955K (2024 Fees & Profits)

The story of Potbelly Sandwich Shop starts in the quaint Lincoln Park district of Chicago, where it originally opened as an antique store in 1977. Created by Peter Hastings and his spouse, the store initially offered sandwiches to its clientele, which eventually led to its transformation into a much-loved sandwich destination. Its original appeal, enhanced by homemade sweet treats and live tunes, swiftly turned it into a local hotspot, renowned for the queues that would form outside.

In 1996, Bryant Keil acquired Potbelly, aiming to spread the unique Potbelly vibe nationwide while preserving its local essence. The brand embarked on a franchising venture in 2009, paving the way for others to share in this distinctive culinary adventure.

With its roots in Chicago, Potbelly stands out for its commitment to uncomplicated, premium fare within an inviting and jovial setting. The interior of each shop is warmly inviting, adorned with local keepsakes, creating a comforting retreat that mirrors the spirit of the surrounding community.

Initial investment

Type of ExpenditureAmount
Initial Franchise Fee$40,000
Schematic Test Fit$0 – $1,500
Site Investigation Report$0 – $10,000
Construction/Leasehold Improvements$275,000 – $425,000
Architect Fee$22,000 – $27,000
Furniture, Fixtures, and Signage$65,000 – $107,000
Equipment (including small-wares)$115,000 – $126,000
Point-of-Sale and Computer Systems$58,000 – $68,000
Opening Inventory$12,000 – $18,000
Market Introduction Program$25,000
Insurance (12 months)$11,000 – $18,000
Training Expenses$15,000 – $45,000
Professional Fees$2,000 – $5,000
Business Licenses and Permits$250 – $1,700
Office Equipment and Supplies$800 – $3,000
Additional Funds – 3 months$25,000 – $35,000
Total$666,050 – $955,200

Note: The table above provides a snapshot of the main costs associated with starting the most common franchise format (as disclosed in the Item 7 of the Franchise Disclosure Document). For a complete overview of all the expenses involved with the various formats offered by the franchisor, please consult the Franchise Disclosure Document.

Franchise fees & Royalties

Initial Investment Requirement

When entering into the Franchise Agreement with Potbelly, new franchise owners are obliged to pay an upfront Initial Investment Requirement of $40,000. This sum forms part of the initial capital necessary for inaugurating a Potbelly franchise and is to be paid in full at the time the agreement is executed.

Ongoing Royalty Payments

Franchise owners are mandated to remit Ongoing Royalty Payments, which amount to 6% of the franchise’s Gross Revenue. These payments are made on a weekly basis and serve as compensation to the franchisor for the franchise rights granted, independent of any particular goods, services, or support provided.

Brand Promotion and Development Levy

Beyond the Ongoing Royalty Payments, franchise owners must also contribute 3.0% of the franchise’s Gross Revenue towards the Brand Promotion and Development Fund. This levy is collected weekly, mirroring the payment schedule of the Royalty Fee, and is allocated for promotional and developmental initiatives.

Online Ordering System Charge

For transactions executed through Potbelly’s online ordering platform, franchisees incur an Online Ordering System Charge of $0.10 per transaction. This weekly charge is allocated towards the ongoing enhancement and upkeep of digital technologies employed by Potbelly.

Sublease Management Cost

In instances where the franchise location is subleased from the franchisor to the franchisee, a Sublease Management Cost not exceeding 1% of the monthly rental under the sublease may be applied. This cost is intended to offset the administrative expenses incurred in managing the sublease arrangement.

How to apply

1. Research and Due Diligence

  • Start by gathering comprehensive information on the Potbelly Sandwich Shop franchise.
  • Visit their official website, read through the franchise section, and download their franchise information packet if available.
  • Understand the brand’s history, mission, values, and what sets it apart from competitors.

2. Initial Contact and Application

  • Reach out to Potbelly’s franchise team through their website or by contacting their franchise development department directly.
  • Fill out the initial franchise application form, providing details about your background, financial capability, and business experience.
  • Express your interest and areas where you wish to open a franchise.

3. Financial Review and Pre-qualification

  • Potbelly will review your financial information to ensure you meet their minimum financial requirements for net worth and liquid assets.
  • This step may involve detailed discussions about your financial resources and investment plans.

4. Discovery Day and Brand Immersion

  • If pre-qualified, you’ll be invited to a Discovery Day at Potbelly’s headquarters or a designated location.
  • This is an opportunity to meet the franchise team, learn more about the brand, and immerse yourself in the Potbelly culture.
  • You’ll get an in-depth look at the operational, marketing, and support systems.

5. Franchise Agreement and Payment of Initial Fee

  • Once both parties decide to move forward, you’ll be presented with the Franchise Agreement.
  • Review this document carefully, possibly with the help of a franchise attorney.
  • Upon agreement, you will pay the Initial Franchise Fee to secure your Potbelly franchise rights.

6. Location Selection and Approval

  • Work with the Potbelly real estate team to identify and evaluate potential locations for your franchise.
  • Consider factors like foot traffic, demographics, and local competition.
  • Potbelly must approve the final location choice before proceeding.

7. Training and Operational Support

  • Attend Potbelly’s comprehensive training program for new franchisees, covering everything from operations to employee training.
  • Utilize the resources and support provided by Potbelly to set up your shop’s operations, marketing, and staff training.

Disclaimer

Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

All content in this article is information of a general nature and does not address the detailed circumstances of any particular individual or entity. Nothing in the article constitutes professional and/or financial and/or legal advice, nor does any information in the article constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this article before making any decisions based on such information or other content.

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