What are the consequences if execution is levied against a Noodles & Company franchisee's business or property?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
ess than 51% of your and/or your Affiliates' securities and voting rights.
Any proposed private placement of your or of your Affiliate's securities must be approved by us and our legal counsel prior to the offering of securities. You shall pay the costs of such review and associated legal fees.
15. DEFAULT AND TERMINATION.
15.01 General. Noodles & Company shall have the right to terminate this Agreement for "cause." "Cause" is hereby defined as a material breach or material default of this Agreement. Noodles & Company has the right to terminate this Agreement upon the following circumstances and in the following manners, each of which is deemed a material breach or default:
15.02 Automatic Termination Without Notice. Subject to applicable laws of the jurisdiction in which the franchise is located to the contrary, Area Operator shall be deemed to be in default under this Agreement, and all rights granted herein shall (unless we otherwise elect by notice to Area Operator) automatically terminate without notice to Area Operator if: (i) Area Operator shall be adjudicated bankrupt or judicially determined to be insolvent (subject to any contrary provisions of any applicable state or federal laws), shall admit to its inability to meet its financial obligations as they become due or shall make a disposition for the benefit of its creditors; (ii) Area Operator shall allow a judgment against him in the amount of more than $25,000 to remain unsatisfied for a period of more than 30 days (unless a supersedeas or other appeal bond has been filed); (iii) if the Restaurant at the Premises or the Area Operator's assets are seized, taken over or foreclosed by a government official in the exercise of its duties, or seized, taken over, or foreclosed by a creditor or lien holder provided that a final judgment against the Area Operator remains unsatisfied for 30 days (unless a supersedeas or other appeal bond has been filed); (iv) if a levy of execution of attachment has been made upon the license granted by this Agreement or upon any property used in the Restaurant at the Premises, and is not discharged within five days of such levy or attachment; (v) if Area Operator consents
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, if a levy of execution or attachment has been made upon the license granted by the Franchise Agreement or upon any property used in the Noodles & Company Restaurant, and it is not discharged within five days of such levy or attachment, Noodles & Company has the right to terminate the agreement without notice. This is subject to applicable laws of the jurisdiction in which the franchise is located.
This means that if a creditor obtains a judgment against a Noodles & Company franchisee and attempts to seize the franchisee's assets or business license to satisfy the debt, the franchisee has a very short window (five days) to resolve the issue. If the franchisee fails to discharge the levy or attachment within this period, Noodles & Company can automatically terminate the Franchise Agreement.
This clause highlights the importance of maintaining strong financial health as a Noodles & Company franchisee. Failure to manage debt and resolve legal judgments promptly can lead to the termination of the franchise and loss of the business. Prospective franchisees should carefully consider their financial capabilities and risk tolerance before entering into a franchise agreement with Noodles & Company.