After the closing date, is the buyer required to continue operations without interruption of all Noodles & Company Restaurants, subject to the terms and conditions of the Franchise Agreements?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
ion of law; (4) any transfer upon your death or the death of any of your Principal Owners by will, declaration of or transfer in trust or under the laws of interstate succession; or (5) any foreclosure upon your Noodles & Company Restaurants or the transfer, surrender or loss by you of possession, control or management of your Noodles & Company Restaurants.
"Your Noodles & Company Restaurant" or "the Restaurant" – The Noodles & Company Restaurants you operate at the Premises. The plural includes all your Noodles & Company Restaurants.
* Any capitalized term not defined in this Section shall have the same meaning as otherwise prescribed in this Agreement.
2. GRANT OF RIGHTS.
2.01 Grant of Franchise and Term. Subject to the terms of this Agreement, we grant to you the right, and you assume the obligation, to operate a Noodles & Company Restaurant at the location set forth on the front page of this Agreement (the "Premises") and to use the Marks and System solely in connection therewith, for a term of 20 years, starting on the date of the opening of your Noodles & Company Restaurant (the "Term"). Immediately after the opening date, Noodles & Company may, at its discretion, deliver a Confirmation of Term Commencement Date in the form of Exhibit C hereto. You must conduct the business of your Noodles & Company Restaurant at the Premises for the duration of the Term. You may not conduct the business of your Noodles & Company Restaurant or use the System at any site other than the Premises, or relocate your
Noodles & Company Restaurant, without our consent. For the duration of the Term, you have the obligation to relocate a closed Noodles & Company Restaurant at a mutually acceptable location, unless we determine otherwise at our discretion. In connection with any catering program approved, implemented or maintained by us, you shall have the right to cater to businesses or other locations within the Protected Area if you follow all procedures and menu requirements, purchase all supplies, products and ingredients through Approved Suppliers and Designated Suppliers, and otherwise follow the Operations Manual as to catering. You may engage with third-party food ordering and delivery systems, and ring up and account for ordering, delivery and catering charges not included in the price of products, only in the manner we permit.
2.02 Your Protected Area.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, franchisees are obligated to operate their Noodles & Company restaurant for the entire 20-year term of the agreement. Specifically, Section 2.01 states that the franchisee assumes the obligation to operate a Noodles & Company Restaurant at the specified location for a term of 20 years from the opening date. The franchisee cannot conduct the business or use the system at any other site or relocate without Noodles & Company's consent.
This requirement ensures the continuous operation of the Noodles & Company restaurant, maintaining the brand's presence and service standards. Franchisees must adhere to this obligation unless they obtain prior written approval from Noodles & Company to cease continuous operations. Failure to maintain continuous operation without approval can result in penalties, as outlined in Section 6.03, which stipulates that the franchisee must pay a continuing royalty fee for each remaining reporting period in the agreement's initial term if the agreement terminates due to a material breach or default, or if the franchisee fails to operate continuously without prior written approval.
The continuing royalty fee is calculated based on the average of the total royalty fees due from the franchisee for the preceding 52 reporting periods, divided by 52. If the restaurant has been open for fewer than 52 reporting periods, the average of all reporting periods for which it was open will be used. This financial implication underscores the importance of continuous operation and the potential costs associated with failing to meet this obligation.
This provision is typical in franchise agreements to protect the brand's reputation and ensure consistent service delivery. Prospective Noodles & Company franchisees should carefully consider this obligation and ensure they have the resources and commitment to maintain continuous operations throughout the franchise term.