Are accounts receivable included in the purchased assets when buying a Noodles & Company franchise?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon the expiration or termination of this Agreement for any reason, we shall give written notice to Area Operator, within 30 days after the
effective date of termination or expiration, if we intend to exercise our option to purchase from Area Operator some or all of the assets used in the Noodles & Company Restaurant ("Assets"). In the event we have exercised such option we shall have the right to immediately enter and take over operations of the Premises. As used in this Section 15.08, "Assets" shall mean and include, without limitation, leasehold improvements, equipment, vehicles, furnishings, fixtures, signs and inventory (nonperishable products, materials and supplies) used in the Restaurant, any liquor licenses and any other licenses necessary to operate the Premises, and the real estate fee simple or the lease for the Premises. We shall have the unrestricted right to assign this option to purchase the Assets. We shall be entitled to all customary representations and warranties that the Assets are free and clear (or, if not, accurate and complete disclosure) as to: (1) ownership, condition and title; (2) liens and encumbrances; (3) environmental and hazardous substances; and (4) validity of contracts and liabilities inuring to user affecting the Assets, whether contingent or otherwise.
- (a) Purchase Price.
The purchase price for the Assets ("Purchase Price") shall be their fair market value, (or, for leased assets, the fair market value of Area Operator's lease) determined as of the effective date of purchase in a manner that accounts for reasonable depreciation and condition of the Assets less the amount of any liabilities associated with the Assets which we elect, in our sole discretion, to assume; provided, however, that the Purchase Price shall take into account the termination of this Agreement.
Further, the Purchase Price for the Assets shall not contain any factor or increment (including goodwill) for any trademark, service mark or other commercial symbol used in connection with the operation of the Noodles & Company Restaurant.
We may exclude from the Assets purchased in accordance with this Section any equipment, vehicles, furnishings, fixtures, signs, and inventory that are not approved as meeting then-current standards for a System Restaurant or for which Area Operator cannot deliver a bill of sale in a form satisfactory to us.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
Based on the 2025 Noodles & Company Franchise Disclosure Document, the definition of "Assets" in the context of the option to purchase does not explicitly mention accounts receivable. The document specifies that "Assets" include leasehold improvements, equipment, vehicles, furnishings, fixtures, signs, inventory (nonperishable products, materials, and supplies), liquor licenses, other necessary licenses, and the real estate or lease for the premises.
When Noodles & Company exercises its option to purchase assets upon termination or expiration of the franchise agreement, the purchase price is determined by the fair market value of the assets, accounting for depreciation and condition, less any liabilities Noodles & Company chooses to assume. The purchase price will not include any value for trademarks or other commercial symbols associated with the Noodles & Company Restaurant.
Prospective franchisees should note that Noodles & Company may exclude assets that do not meet current system standards or for which a satisfactory bill of sale cannot be provided. Since accounts receivable are not listed in the definition of assets, a potential franchisee should seek clarification from Noodles & Company regarding whether accounts receivable are considered part of the assets that may be purchased and how they would be valued in such a transaction.