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
Here’s what you can expect to spend to start a Potbelly Sandwich franchise.
Type of Expenditure | Amount |
---|---|
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
Here are the main ongoing fees the franchisor will ask you to pay going forward to run the franchise.
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
Opening a Potbelly Sandwich franchise involves several steps, designed to ensure you are a good fit for the franchise. Here are the main steps to follow to open a Potbelly Sandwich franchise.
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
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