What activities are prohibited by the non-competition covenant after transferring a Noodles & Company franchise?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
- (k) you and your Owners must execute a non-competition covenant, in form and substance satisfactory to us, in favor of us and the transferee agreeing that, for a period of two years, starting on the effective date of the Transfer, you and your Owners will not directly or indirectly (such as through members of his/her or Immediate Families) own any legal or beneficial interest in, or render services or give advice to: (1) any Competitive Business; or (2) any entity which grants franchises, licenses or other interests to others to operate any Competitive Business in any Designated Market Area (as defined by Nielsen Media Research) where a Noodles & Company Restaurant is located, whether Company-owned or franchised, or within any area that is or was within an Area Development Area or a Protected Area, as those terms are defined in the Area Development Agreement and this Agreement;
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, if you transfer your franchise, you and your owners must sign a non-competition agreement. This agreement prevents you and your owners, for two years after the transfer date, from engaging in specific activities that could compete with Noodles & Company.
Specifically, you cannot directly or indirectly (including through immediate family members) own any legal or beneficial interest in, or provide services or advice to, any Competitive Business. A Competitive Business is defined as any business that operates or franchises restaurants where the sale of specific dishes constitutes more than 10% of their revenue, that are substantially similar to the Noodles & Company concept, or that operate in a fast-casual or quick-casual format.
Furthermore, the non-competition covenant extends to any entity that grants franchises, licenses, or other interests to others to operate a Competitive Business. This restriction applies within any Designated Market Area (as defined by Nielsen Media Research) where a Noodles & Company Restaurant is located, whether it's company-owned or franchised. It also includes any area that is or was within an Area Development Area or a Protected Area, as defined in the Area Development Agreement and Franchise Agreement. This ensures that former franchisees and their owners do not leverage their knowledge and experience to undermine Noodles & Company's market position after transferring their franchise.