How to Finance a Potbelly Franchise: Multi-Unit Rules and Costs
By Marc Cornella
A Potbelly franchise loan usually funds more than one sandwich shop. Potbelly’s franchising program is built around multi-unit operators who sign development commitments, meet a published net worth and liquidity minimum, and open their first shop within about a year of signing, so the financing plan has to look past opening day to the second, third and later shops.
This article covers what Potbelly publishes about its franchise fee, royalty and owner requirements, how the brand’s history and shop formats affect the way lenders view it, how SBA 7(a), SBA 504 and conventional financing can fit a development schedule, and what lenders look for when you build a new shop, buy a company-operated shop or add units over time.
US Professional Funding is not affiliated with, sponsored by or endorsed by Potbelly Sandwich Shop or its franchisor; the name is used only to describe the business. Figures from the franchisor’s disclosure document and its own published materials can change, loan programs and terms vary by lender and borrower, and every loan is subject to lender review and approval. Nothing here is legal, tax or investment advice, so review the current Franchise Disclosure Document (FDD) and franchise agreement with a qualified franchise attorney and accountant before you commit.
Potbelly Franchise Loan at a Glance
- Initial franchise fee: $40,000 for the first shop, plus a $20,000 deposit for each additional shop in the agreement, according to Potbelly’s franchising FAQ.
- Royalty: a weekly royalty of 6.0% of gross sales net of discounts, as described in the company’s most recent annual report as a public company.
- Brand fund and other fees: franchisees contribute to the Potbelly Brand Fund and pay IT and operational fees; the current rates appear in Item 6 of the FDD.
- Owner minimums: $1.5 million net worth and $500,000 in liquidity, which Potbelly says may be met with investor partners.
- Experience preferred: multi-unit restaurant or retail operating experience, with five years in the restaurant business or a related venture preferred but not required.
- Franchise term: an initial term of ten years with the option to renew, according to the annual report.
- System size: more than 445 company and franchise-owned shops, including more than 105 franchised shops, as of October 2025.
- SBA Franchise Directory: listed as Potbelly Sandwich Shop under code S1342, with no additional directory note.
Potbelly does not publish a total estimated initial investment on its franchising pages; it says total costs vary with the shop footprints chosen and the number of units in the agreement. The Item 7 table in the current disclosure document is the place to get that range and its assumptions.
What Is Potbelly?
Potbelly traces its roots to 1977 and a small antique store on Lincoln Avenue in Chicago, and the company is still headquartered in Chicago, Illinois. The menu centers on toasted sandwiches, salads, shakes and cookies across multiple dayparts, along with catering, delivery and pickup.
For most of its history, Potbelly grew through company-operated shops. In 2022 the company announced a Franchise Growth Acceleration Initiative aimed at expanding through multi-unit development agreements, including refranchising some company shops to franchisees. At the end of 2024, the company reported 442 shops in 29 states and the District of Columbia, of which 346 were company-operated and 96 were franchise-operated across 22 states, plus commitments for 276 future franchise shops.
In October 2025, Potbelly was acquired by a privately held company and is no longer publicly traded. In announcing the closing, the company said franchising continues, the menu is unchanged, and the new parent’s long-term goal is to reach 2,000 shops. For a borrower, the practical point is that the brand’s growth now depends heavily on franchise development, which is why its program favors experienced multi-unit operators.
Shop formats. According to the annual report, Potbelly shops average approximately 2,300 square feet, new openings target 1,800 to 2,200 square feet, and typical dining areas seat 20 to 40 guests, with some shops offering larger dining rooms or patios. The company also references drive-thru service, and its franchising site lists a Potbelly Digital Kitchen format. Your shop format drives the build-out budget, the equipment package and the lease you need to finance.
Why lenders know the concept. A long operating history, a large base of company-operated shops and an SBA directory listing give lenders a familiar starting point.
Potbelly Franchise Costs
Potbelly’s total cost depends on the footprint, the market, whether you take over an existing shop and how many shops your agreement covers. Here is how the main pieces fit together.
Initial franchise fee and development deposits
Potbelly’s franchising FAQ lists an initial franchise fee of $40,000 for the first shop, plus a $20,000 deposit for each additional shop. The annual report explains that under a development agreement the developer pays a development fee that is credited toward the initial franchise fee for each shop opened under that agreement. In financing terms, a multi-shop agreement means paying deposits for future shops at signing, long before those shops generate revenue, so those deposits belong in your equity plan.
Lease, build-out and real estate
Most sandwich shops operate from leased space. Build-out typically covers demolition, plumbing, electrical, HVAC, the service line, dining room finishes and exterior signage, and on a drive-thru site it may include site work and a pickup window. Tenant improvement allowances and free rent periods can reduce how much you need to borrow. Our article on financing a restaurant build-out walks through how those costs are usually structured.
Kitchen equipment, technology and signage
A Potbelly shop needs toasting ovens, refrigeration, prep tables, slicers, shake and beverage equipment, point-of-sale and digital ordering technology, smallwares and signage. The annual report notes ongoing IT fees, and brand specifications determine which equipment and systems you must buy.
Training, opening costs and working capital
Potbelly says owners complete three days of in-person training, and owners who plan a hands-on role complete an additional six weeks of operator training. Opening support comes from a team of certified trainers drawn from shops across the system. Budget for training travel, pre-opening payroll, grand opening marketing, opening inventory, deposits, insurance and a working capital cushion for the months while sales build.
Total investment
Because Potbelly does not post an Item 7 range on its franchising pages, use the disclosure document for the total. When you review Item 7, look for these line items and how each one is estimated:
- Initial franchise fee and any development deposits
- Real estate, lease deposits and rent before opening
- Leasehold improvements and construction
- Furniture, fixtures and kitchen equipment
- Signage and décor
- Computer, point-of-sale and digital ordering systems
- Opening inventory and supplies
- Training expenses, including travel
- Grand opening marketing
- Licenses, permits, insurance and professional fees
- Additional funds for the initial operating period
Ongoing Fees and How They Affect Your Loan
Lenders size a Potbelly franchise loan on the cash flow left after operating costs and franchise fees, so these recurring charges directly limit how much debt a shop can carry.
- Royalty: a weekly royalty of 6.0% of gross sales net of discounts, according to the annual report.
- Brand Fund: franchisees contribute to the Potbelly Brand Fund for advertising and marketing; confirm the current rate in Item 6.
- IT and operational fees: ongoing technology and operational fees described in the annual report, with current amounts in the FDD.
- Local marketing, transfer and renewal fees: listed in Item 6 and the franchise agreement.
Because the royalty is collected weekly on sales, it rises and falls with revenue, but it never disappears in a slow week. When a lender builds a debt service coverage analysis, it subtracts the royalty, brand fund contribution, technology fees, rent, labor and food costs before measuring what is available for loan payments. A projection that leaves any of them out overstates what the shop can borrow.
Plan for remodels as well. Most restaurant franchise agreements require periodic updates to brand standards, and a remodel funded out of operating cash can squeeze debt service. Ask the franchisor about expected refresh timing, and read the franchise agreement provisions on upgrades before you sign.
Franchisor Requirements for New Owners
Potbelly’s candidate page lists a minimum net worth of $1.5 million and minimum liquidity of $500,000. The company says these are minimums, that total capital needs depend on the number of units in the agreement, and that partnerships with investors may be used to meet them.
On experience, Potbelly says proven experience operating multi-unit restaurant or retail brands is ideal. It prefers five years in the restaurant business or a related venture and says it prefers, but does not require, that you or someone in your ownership group have restaurant industry experience.
Development focus. Potbelly says its current focus is multi-unit franchise growth in available markets, with single-unit ownership possible depending on location. Most agreements require the first shop to open about 12 months after signing, and timelines for later shops are set during the franchise process. Its inquiry form asks candidates to choose a potential shop count ranging from 3–5 up to 15+, which signals the scale of commitment the brand expects.
Approval process. Expect an introductory call, an application with financial disclosure, review of the FDD and approval of your proposed development area. Because the franchisor wants proof of financing capacity and your lender wants the signed agreements, start the Potbelly franchise loan conversation early.
Ways to Own a Potbelly
Opening a new shop. A new shop requires site selection, lease negotiation, build-out and pre-opening costs, and a lender has only projections to underwrite. Start-up financing is usually the most equity-intensive path. See our overview of franchise start-up financing.
Buying a company-operated shop. Potbelly has refranchised company shops to franchisees as part of its growth plan, and its quarterly report for early 2025 shows four company shops sold to franchisees in that quarter. Buying an operating shop from the franchisor gives a lender a sales history to review. Our article on buying company-owned franchise locations explains how these deals are typically financed.
Buying from an existing franchisee. A resale requires franchisor approval of the buyer and a transfer under the franchise agreement. Lenders focus on the shop’s historical financials, lease term and any remodel the franchisor requires at transfer. See our page on franchise restaurant acquisition financing.
Signing a development agreement. Most new owners will sign for several shops under a development agreement. Each shop is usually financed separately as it opens, so the financing plan has to show how future equity and borrowing capacity will keep pace with the schedule.
Financing Options for a Potbelly Franchise
SBA 7(a) loans
SBA 7(a) loans are a frequent fit for a new Potbelly shop or the purchase of an existing one, because a single loan can cover leasehold improvements, equipment, the franchise fee, opening costs and working capital, subject to program rules. The 7(a) program maximum is currently $5 million, and program rules can change. For a multi-unit operator, the SBA limit applies across a borrower’s total SBA exposure, which matters as the shop count grows.
SBA 504 loans
If you buy or build a freestanding drive-thru building or buy the real estate under a shop, SBA 504 financing is designed for owner-occupied real estate and long-lived fixed assets. It pairs a bank loan with a loan through a certified development company and a borrower contribution, subject to program rules and lender approval. Leased in-line shops generally do not need 504 financing.
Conventional term loans
Experienced multi-unit operators with strong balance sheets may qualify for conventional business loans, including development lines that fund several shops as they open. Conventional lenders typically weigh the operator’s track record and global cash flow heavily.
Equipment financing
Toasting ovens, refrigeration, shake machines, point-of-sale hardware and digital ordering screens can be financed separately with restaurant equipment financing and leasing. The equipment serves as collateral, though your primary lender will count that debt when it calculates coverage.
Working capital and lines of credit
A new shop needs cash for pre-opening payroll, training travel and the months while sales build, and catering orders can create timing gaps between food costs and collections. Our page on restaurant working capital covers lines of credit and short-term options.
Seller financing on resales
When buying a shop from an existing franchisee, the seller may sometimes agree to carry part of the price. A seller note is typically subordinate to the primary loan, and SBA rules and lender policies may limit how it is structured or when it can be repaid.
SBA Loans for Potbelly Franchisees
SBA-backed loans are made by participating lenders, with the SBA guaranteeing part of the loan. For a franchise, the lender must also confirm that the borrower has enough control of its business to be eligible, and the SBA Franchise Directory makes that review simpler.
The Potbelly directory listing. Potbelly Sandwich Shop appears on the SBA Franchise Directory under code S1342, and the listing carries no special note. In plain English, a lender can generally rely on the listing for the franchise agreement eligibility review without any brand-specific addendum or condition, although the borrower, project and loan still have to meet every other program requirement. A listing does not approve any borrower or guarantee a loan.
SBA application tips for Potbelly owners. Have the franchise or development agreement, the FDD, a signed lease or letter of intent, contractor bids, an equipment quote, a sources and uses statement and projections ready. Include personal financial statements, tax returns and résumés for every owner with a meaningful stake, and show how you will fund the deposits and equity for later shops in your development schedule. Our SBA loan calculator can help with early payment estimates, which are for planning only and are not an offer or approval.
How Lenders Evaluate a Potbelly Deal
Personal credit and financial history. Lenders review the credit reports, tax returns and existing debts of each principal owner, and owners with a significant stake usually sign personal guarantees.
Net worth and liquidity. Potbelly’s own minimums of $1.5 million net worth and $500,000 in liquidity are only the starting point. Lenders look at how much cash you will inject, what remains after closing, and whether you can fund equity for future shops on schedule.
Restaurant and multi-unit experience. Because Potbelly prefers multi-unit operators, lenders tend to give real weight to prior restaurant or retail management, especially profit and loss responsibility across several locations. A borrower without that background can strengthen the request by bringing an experienced operating partner or district manager into the ownership group.
Business plan and projections. Projections should reflect the actual shop format, trade area and daypart mix, including lunch, dinner, catering and digital orders. Build in the 6.0% royalty, Brand Fund contribution, technology fees, rent, labor and food costs, and use conservative ramp-up assumptions.
The FDD and franchise agreement. Lenders review the ten-year initial term, renewal rights, transfer provisions, development schedule and termination rights. They want the loan term to fit within the franchise term, and they pay attention to what happens to the remaining shops if a development deadline is missed.
The site and lease. Expect lenders to require a lease term, including renewal options, that covers the loan term, along with landlord consent to the lender’s lien on equipment and improvements.
Historical financials on resales. For a refranchised or resale shop, lenders study several years of profit and loss statements, sales reports and tax returns, and compare them with the seller’s records and the franchisor’s transfer requirements.
Kitchen, Drive-Thru and Digital Equipment
Potbelly’s operation is built around toasting sandwiches to order on a fast service line, plus shakes, cookies and catering trays. That makes the equipment package central to the loan request: ovens, refrigeration, prep stations, beverage equipment and the technology that handles in-shop, digital and catering orders.
The company has emphasized off-premise sales, including catering, delivery and pickup. A shop that leans on digital ordering or a drive-thru lane may need additional screens, pickup shelving, order routing technology and, on a drive-thru site, more site work. Lenders will want an itemized quote that matches the brand’s specifications.
Multi-Unit Growth and Development Agreements
Multi-unit development is the heart of Potbelly’s franchise model. Under a development agreement, the developer receives exclusive rights to develop shops in a defined area for a set period, pays a development fee that is credited toward each shop’s franchise fee, and commits to an opening schedule.
In 2025, the company announced a 50/50 Large Area Developer Incentive Program for franchisees who sign a Shop Development Area Agreement to open at least 15 shops within eight years. The company said the program offers reduced initial franchise fees and deposit fees, plus 50% off royalty fees for the period a shop is open ahead of its required opening date. Confirm whether the program is still available and how it is documented in your agreement, since incentives can change.
From a financing perspective, a development schedule is a promise that you will have equity and borrowing capacity at each deadline. Lenders financing the second or third shop look closely at the first shop’s performance, your global cash flow and your remaining liquidity. Our guide to financing an area development agreement explains how operators pace equity, construction and debt across a schedule.
Real-World Scenarios
A multi-unit restaurant operator adding a new brand. An operator with several quick-service restaurants signs a Potbelly development agreement for a cluster of shops in an open market. The first shop is financed with an SBA 7(a) loan covering build-out, equipment and working capital, and the operator plans conventional financing for later shops once the first has an operating record.
A buyer acquiring company-operated shops. An experienced operator buys several existing shops from the franchisor as part of a refranchising transaction. The lender underwrites the shops’ historical sales and expenses, and the purchase includes a development commitment for new shops nearby.
A first-time owner partnering with an operator. An investor who meets the net worth and liquidity minimums but has no restaurant background partners with a former multi-unit restaurant manager who takes an ownership stake and runs day-to-day operations. The lender weighs the operating partner’s résumé heavily.
An owner adding a drive-thru shop. An existing franchisee buys a freestanding pad site for a drive-thru shop and uses SBA 504 financing for the real estate plus separate equipment financing.
Common Mistakes to Avoid
- Signing a multi-shop development agreement without a plan to fund the deposits and equity for later shops
- Treating the $1.5 million net worth and $500,000 liquidity figures as the full cash requirement
- Leaving the royalty, Brand Fund contribution or technology fees out of cash flow projections
- Committing to a lease before confirming that its term covers the loan term
- Underestimating build-out on a drive-thru or freestanding site
- Starting the financing process too late to meet the first shop’s opening deadline
- Comparing loan offers on rate alone instead of term, collateral, prepayment terms and guarantees
For more, read the restaurant loan mistakes that cost owners the most.
Next Steps to Finance Your Potbelly Franchise
Step 1: Confirm you fit the profile. Compare your net worth, liquidity and operating experience with Potbelly’s published minimums, and decide whether you need an investor or operating partner.
Step 2: Review the disclosure document. Read the current FDD with a franchise attorney, focusing on Items 5, 6, 7, 10, 12 and 17, the development agreement and the franchise agreement.
Step 3: Choose your path and market. Decide whether you are building new shops, buying company-operated shops, buying from a franchisee or combining these routes.
Step 4: Build a realistic budget. Include franchise fees and deposits, build-out, equipment, technology, training, opening costs and working capital, then add a contingency.
Step 5: Talk with a financing specialist early. Confirm which loan structures may fit the first shop and how you will finance later shops before you sign a development agreement.
Step 6: Assemble your documents. Gather financial statements, tax returns, résumés, the FDD, the franchise or development agreement, lease documents, contractor bids and projections.
Step 7: Close and plan the next shop. Coordinate the loan closing with the lease, construction schedule and opening date, then start planning the financing for your next shop well before its deadline.
Potbelly Franchise Loan FAQs
How much does it cost to open a Potbelly franchise?
Potbelly does not publish a total investment range on its franchising pages and says costs vary with the shop footprint and the number of units in your agreement. The Item 7 table in the current FDD provides the estimated initial investment and its line items, so use that document for budgeting.
What is the Potbelly franchise fee?
According to Potbelly’s franchising FAQ, the initial franchise fee is $40,000 for the first shop, plus a $20,000 deposit for each additional shop in the agreement.
What royalty does Potbelly charge?
The company’s annual report describes a weekly royalty of 6.0% of gross sales net of discounts. Franchisees also contribute to the Potbelly Brand Fund and pay IT and operational fees, which are detailed in Item 6 of the FDD.
How much net worth and liquid capital do I need?
Potbelly lists a minimum net worth of $1.5 million and minimum liquidity of $500,000, and says investor partnerships may be used to meet those minimums. Lenders will also look at how much cash remains after your equity injection.
Is Potbelly eligible for SBA loans?
Potbelly Sandwich Shop is listed on the SBA Franchise Directory under code S1342 with no additional note. Eligibility still depends on the borrower, the project, program rules and lender approval.
Can I own just one Potbelly shop?
Potbelly says its current focus is multi-unit growth, but single-unit ownership may be possible depending on location. Ask the franchise team what is available in your market.
Do I need restaurant experience?
Potbelly prefers that you or someone in your ownership group have restaurant industry experience but says it is not required. Lenders often weigh experience heavily, so a partner with restaurant management experience can strengthen a loan request.
Can I buy an existing Potbelly shop?
Yes. Potbelly has sold company-operated shops to franchisees, and franchisee-owned shops can change hands with franchisor approval. Lenders generally prefer acquisitions with several years of financial history to review.
Does Potbelly offer financing?
Check Item 10 of the current FDD, which describes any financing the franchisor offers. Most franchisees arrange their own financing through lenders.
How long is the Potbelly franchise agreement?
The company’s annual report describes an initial term of ten years with the option to renew. Lenders generally want the franchise term, and the lease, to run at least as long as the loan.
Does Potbelly disclose financial performance?
Review Item 19 of the current FDD to see whether it includes financial performance representations and what they cover, and build your own projections with your accountant.
What documents do I need for a Potbelly franchise loan?
Expect to provide personal financial statements, tax returns, résumés, the FDD and franchise or development agreement, a lease or letter of intent, contractor and equipment bids, and a business plan with projections.
Final Thoughts
A Potbelly franchise loan works best when it is planned as part of a development strategy rather than a single transaction. Owners who meet the brand’s minimums with room to spare, build every fee into their projections and line up financing for later shops before signing give themselves the strongest chance of opening on schedule.
US Professional Funding helps franchisees finance new shops, acquisitions, equipment and multi-unit growth. Learn more about our franchise financing programs and our restaurant financing solutions.
