What is considered an unauthorized transfer of Development Rights for a Noodles & Company franchise?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
7. AREA OPERATOR'S RIGHT TO TRANSFER.
- 7.01 Franchisor's Approval. Your rights and duties under this Agreement are personal to you and your Principal Owners. Accordingly, neither you nor any of your Owners may Transfer the Development Rights or any direct or indirect interest therein without our prior written consent, which may be withheld in our sole discretion. If we are required by applicable law to permit a transfer, the criteria in Section 7.02 must be met and you must obtain our approval. Any such transfer without such approval or compliance constitutes a breach of this Agreement and is void and of no force or effect. You may not, under any circumstances, directly or indirectly, subfranchise or sublicense any of your rights hereunder. If applicable law does not require us to permit a transfer, no transfer shall be permitted and Section 7.02 will not apply.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, transferring Development Rights without prior written consent from Noodles & Company constitutes a breach of the Area Development Agreement and is considered void. The rights and duties within the agreement are personal to the franchisee and their principal owners, meaning that neither the franchisee nor their owners can transfer the Development Rights, or any interest within, without first obtaining written approval from Noodles & Company.
Noodles & Company has sole discretion in either withholding or providing approval of a transfer. If the law requires Noodles & Company to permit a transfer, certain criteria must be met to gain approval. These criteria include compliance with the Area Development Agreement, all franchise agreements, and other agreements with Noodles & Company or its affiliates. The proposed transferee must be a legally recognized entity (corporation, partnership, or limited liability company), and its owners must provide all requested information, be of good character, possess sufficient business experience and financial resources, and meet Noodles & Company's current standards for approval.
Additional conditions for approval include the transferee not being or becoming a Publicly Held Entity or affiliated with one. The transferee and its owners must agree to be bound by the current Area Development Agreement for the remainder of its term. These stipulations ensure that any transfer aligns with Noodles & Company's standards and protects its interests. The FDD specifies that even if Noodles & Company is required by law to permit a transfer, failing to meet these conditions will still render the transfer unauthorized and void.