What average forfeiture rate does Noodles & Company estimate for stock-based compensation calculations?

According to Noodles & Company's 2025 Franchise Disclosure Document, the company estimates an average forfeiture rate of 26% for stock-based compensation calculations. This rate is based on the class of employees receiving the stock-based compensation and is used in calculating the stock-based compensation expense for the year ending December 31, 2024. The estimate is derived from the historical forfeiture behavior of Noodles & Company's employees.

For a prospective franchisee, this information is relevant in understanding how Noodles & Company manages and accounts for its employee compensation, particularly concerning stock-based awards. While franchisees themselves may not directly participate in these stock-based compensation plans, the financial health and stability of the franchisor, Noodles & Company, is crucial for the overall success of the franchise system. Understanding these accounting practices provides insight into the company's financial management and employee retention strategies.

The forfeiture rate is an important factor in determining the actual expense recognized by Noodles & Company for stock-based compensation. A higher forfeiture rate would result in a lower recognized expense, while a lower rate would increase the expense. This estimate is subject to change based on the actual forfeiture behavior of employees, which can impact Noodles & Company's financial statements.

It's worth noting that these estimates are based on historical data and may not accurately predict future forfeiture rates. Changes in company policies, employee demographics, or economic conditions could all influence these rates. Therefore, while the 26% average provides a benchmark, prospective franchisees should be aware that this figure is subject to variability and is part of the broader context of Noodles & Company's financial reporting.