What constitutes a 'competitive business' to Noodles & Company?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
| q. Non-competition covenants during the term of the franchise | Section 7.02 | Except for a 5.0% or less ownership interest in a publicly traded company, you may not directly or indirectly own or have any legal or beneficial interest in or render services or give advice to any competitive business located in the United States. A competitive business is any business that operates or franchises one or more restaurants: (1) whose sales of Specified Dishes (as defined below) collectively constitute more than 10.0% of restaurant operating revenues; (2) that are the same as, or substantially similar to, the Noodles & Company concept as it evolves or changes over time; or (3) that operate in a fast casual or quick casual format. As used in this Agreement, "Specified Dishes" means noodle dishes, pasta dishes, Asian dishes, Italian or Mediterranean dishes and any other dishes that are the same or substantially similar to the dishes on the Noodles & Company menu ("Noodles & Company Dishes") as it may evolve or change over time. |
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| r. Non-competition covenants after the franchise is terminated or expires | Section 7.03 | For 2 years after termination or expiration and except for a 5.0% or less ownership interest in a publicly traded company, you may not own, or have any legal or beneficial interest in, or render services or give advice to, any competitive business, as described above in q. in any Designated Market Area (as defined by Nielsen Media Research) where any Noodles & Company restaurant is located. Noodles & Company may, in its discretion, exclude from this clause certain competitive businesses approved by Noodles & Company at the time of execution of your Area Development Agreement and Franchise Agreements or approved subsequent to the execution of those agreements. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 63–83)
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, a 'competitive business' is defined in relation to non-competition covenants during the franchise term. Specifically, with the exception of holding a 5.0% or less ownership interest in a publicly traded company, a franchisee cannot directly or indirectly own, have a legal or beneficial interest in, or provide services or advice to any competitive business within the United States.
Noodles & Company defines a 'competitive business' as any business that operates or franchises one or more restaurants that meet any of the following criteria: (1) whose sales of 'Specified Dishes' collectively constitute more than 10.0% of the restaurant's operating revenues; (2) that are the same as, or substantially similar to, the Noodles & Company concept as it evolves or changes over time; or (3) that operate in a fast casual or quick casual format. 'Specified Dishes' are defined as noodle dishes, pasta dishes, Asian dishes, Italian or Mediterranean dishes, and any other dishes that are the same or substantially similar to the dishes on the Noodles & Company menu as it may evolve or change over time.
This definition has significant implications for prospective franchisees. It restricts their ability to invest in or work with similar restaurant concepts, ensuring their focus remains on the success of their Noodles & Company franchise. The broad definition of 'Specified Dishes' and 'substantially similar' concepts means franchisees need to be cautious about any potential conflicts of interest. The restriction applies during the franchise term and extends for two years after termination or expiration of the franchise, within any Designated Market Area where a Noodles & Company restaurant is located. Noodles & Company may exclude certain competitive businesses from this clause at their discretion, either at the time of signing the agreements or later.