Verified — real FDD extraction
SBA-eligible · directory code S1342 since 2017
Potbelly Sandwich Shop
Food & Dining · independent · est. —
Potbelly Sandwich Shop is a fast-casual chain serving toasted sandwiches, soups, salads, and shakes in a neighborhood shop atmosphere. A franchisee operates one or more storefront shops with counter service and digital ordering, serving lunch-heavy office and retail traffic.
Potbelly Sandwich Shop net unit count grew +10.6% from 2023–2025 per its FDD Item 20.
New to franchising? Start here
A franchise is a business where you (the franchisee) pay a company (the franchisor) for the right to open and run a location using their brand and system — think a local Anytime Fitness or Taco John's owned by a small-business owner, not the corporation.
Before you can buy in, U.S. law requires the franchisor to give you a Franchise Disclosure Document (FDD) — a long legal filing covering its fees, finances, and history. The numbers on this page come straight from that document:
- Franchise fee — the one-time cost to buy in.
- Royalty — the ongoing cut of your sales you pay the franchisor.
- Item 20 — how many locations opened and closed, the basis for our verdict (from Proven & strong down to Distressed — or Too new to judge).
The verdict
Proven & steady
Distress
A real track record with an unremarkable region of the ledger: neither the growth nor the exits stand out, for better or worse. The main concern in the record: too many owners are failing outright rather than selling.
Exit rate · latest year
2.0%
vs 8.6% across 137 food & dining systems
Cost to open
$629K–$999K
Item 7 total investment range
SBA loan defaults
Too few resolved
22 loans exist; too few resolved to rate
Behind the verdict
the record, factor by factor · Item 20
3-yr trend · Item 20 Table 1
terminations + ceased-ops vs. all exits · Table 3
transfers vs. base · Table 3
actual vs. projected openings · Table 5
Item 19 disclosure + completeness
Systemwide units
2023–2025
Survival record
FDD Item 20 · outlet status by year
In fiscal 2025, 2 of 102 franchised outlets left the system — a 2.0% annualized exit rate, vs 8.6% across 137 food & dining systems. Not every exit is a failure — but this is the measurable floor.
Show the outlet tables ↓Hide the evidence ↑
| Status (FTC) | 2023 | 2024 | 2025 |
|---|---|---|---|
| Outlets at start | 429 | 425 | 444 |
| Opened | 39 | 24 | 22 |
| Transfers | 0 | 0 | 0 |
| Terminations | 4 | 2 | 2 |
| Non-renewals | 0 | 0 | 0 |
| Reacquired by franchisor | 0 | 0 | 0 |
| Ceased — other reasons | 0 | 0 | 0 |
| Outlets at end | 425 | 444 | 470 |
| Net change | -4 | +19 | +26 |
The lender's view
SBA 7(a)/504 loan performance · FY1991–present
Banks have made 22 SBA-backed loans to Potbelly Sandwich Shop franchisees since 2019. Most are still open, so there is not yet a resolved cohort large enough to rate.
—
0 resolved · too thin to rate
—
avg. charged-off $ ÷ approved $
—
default rate × loss severity
$701,038
what recent franchisees borrowed
—
approval → charge-off, defaulted loans
9 vs 2
distinct banks still lending
Charge-off rate by loan approval year (%)
Loan performance by state
SOURCE: SBA 7(a)/504 FOIA LOAN DATA (DATA.SBA.GOV), FY1991–PRESENT · MATCHED TO POTBELLY SANDWICH SHOP BY FRANCHISE NAME · RESOLVED = CHARGED-OFF + PAID-IN-FULL
The owner's side of the deal
FDD × federal loan record
A typical Potbelly Sandwich Shop buyer since 2020 borrowed $701K through SBA — about $106K a year in debt service. Against the brand's own disclosed median unit revenue of $1.2M, that is 8.9% of every dollar the store takes in — before rent, payroll, food, or royalty.
Who finances it
the Huntington National Bank
45.5% of this brand's loans
That lender charges off 10.1% of its loans to other franchise brands, vs 14.8% nationally.
Who buys it
Too few identified operators
Does experience help here?
Not enough resolved loans to split
Computed from 22 SBA 7(a)/504 loans to Potbelly Sandwich Shop franchisees joined to the brand's own FDD. Debt service assumes level amortization at the average disclosed term and rate. A lender's rate excludes its loans to this brand, so it reads the lender, not the brand.
What it costs — and what it drags
FDD Items 5–7 · fees, investment, royalty
Buying in means a $40K franchise fee (Item 5) and a total investment of $629K–$999K (Item 7). The franchisor publishes an earnings claim (Item 19) — read its methodology closely.
To open (Item 7)
$629K–$999K
all-in investment range
Franchise fee (Item 5)
$40K
upfront, one-time
Royalty (Item 6)
6%
of sales, ongoing
Your figure — cross-check against this brand's Item 19 and current-owner validation.
Royalty you'd pay / yr
$60K
6% of sales, before profit
Over a 10-yr term
$600K
royalties alone, excl. ad fund
This is not profit. It's the only money the FDD actually pins down — what you put in, and the royalty you owe on every dollar of sales. Your real take-home depends on labor, rent, food cost, and ramp-to-breakeven, none of which any FDD discloses.
Build a real pro-forma for Potbelly Sandwich Shop with an independent CPALabor record
US Dept. of Labor enforcement · franchisee-level · FY2005–present
Federal investigators have concluded 5 wage cases against operators of this system, recovering $687 in back wages for 4 workers, including 2 child-labor cases. Some of these cases are recent, not ancient history. These cases name franchisee-owned locations, not the franchisor itself.
Concluded cases
5
Back wages owed
$687
Employees affected
4
Since 2020
1
2 of these cases involved child-labor violations, covering 7 minors across the system's franchised locations.
Read this carefully. The employers in these cases are individual Potbelly Sandwich Shop franchisees — separately owned businesses operating under the brand name — not Potbelly Sandwich Shop itself. The franchisor is not the respondent and in most cases is not a party. What the record shows is how this system's operators run their payrolls, which is worth knowing before you become one of them. Counts rise with system size and with age: a 20-year-old, 10,000-unit system will out-count a young one regardless of conduct. Source: DOL Wage and Hour Division concluded compliance actions, FY2005–present, most recent finding 2022.
Modeled risk
FDD Risk Score · modeled from the public record
The public record puts this brand toward the safer end of the systems we score — but the evidence is thin, so treat it as a range, not a number.
Risk percentile (range)
3–27 / 100
Directional
Modeled SBA charge-off
8.1%
Observed SBA charge-off
no resolved cohort
Top drivers: Share financed by high-loss lenders (lowers) · Single-lender dependence (lowers) · Net unit growth (lowers) · Investment ceiling (log) (lowers). Thin loan history — treat this as a range, not a number. A linear scorecard built from this brand's own disclosure figures plus the federal loan record behind its franchisees; full spec and cross-validated accuracy on the methodology page. A score is context, not a verdict.
Distress signals
news-sourced · bankruptcies, closures, lawsuits
No recent closures, bankruptcies, or major lawsuits found in the news for Potbelly Sandwich Shop. That's a good sign — but it reflects news coverage, not a guarantee.
A broker is paid by the franchisor to place you. An independent CPA is paid by you — and the job is pressure-testing Potbelly Sandwich Shop's numbers, including talking you out of a bad deal.
Talk to an independent CPA before you buy →Potbelly Sandwich Shop franchise questions, answered from the filings
What percentage of Potbelly Sandwich Shop franchises closed last year?
In Potbelly Sandwich Shop's latest FDD Item 20 (fiscal 2025), 2 of 102 franchised outlets left the system — an annualized exit rate of 2.0% — compared with 8.6% across 137 food & dining systems tracked here. That counts terminations, non-renewals, and "ceased operations — other reasons." There is no official failure rate, and not every exit is a failure, but this is the measurable floor.
How much does a Potbelly Sandwich Shop franchise cost?
Per Potbelly Sandwich Shop's 2026 FDD, buying in requires an initial franchise fee of $40K (Item 5) and a total initial investment of $629K–$999K (Item 7).
What royalty does Potbelly Sandwich Shop charge?
Potbelly Sandwich Shop charges an ongoing royalty of 6.0% of gross sales, per Item 6 of its 2026 FDD.
Does Potbelly Sandwich Shop disclose earnings (Item 19)?
Yes — Potbelly Sandwich Shop makes a financial performance representation in Item 19 of its 2026 FDD, reporting a median unit volume of $1.2M. Read it closely: franchisors choose which units and which metrics to include.