What constitutes a failure to adequately maintain a bank account for a Noodles & Company franchise?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) Failure to Adequately Maintain Bank Account.
If Area Operator fails to maintain adequate resources in the designated bank account (as described in Section 6.04) to fully and timely satisfy all Sweeps of the account Noodles & Company is permitted to make under this Agreement.
6.04 Designated Account. Prior to the opening of your Noodles & Company Restaurant, and as a condition thereof, you shall establish a designated bank account from which we shall be authorized to withdraw in any manner which we prescribe, which
may include account transfer or wire transfer, any amounts due to us or our Affiliate from you under this Agreement, including Royalty Fees and Marketing Funds, as hereinafter defined (such withdrawals shall be defined as a Sweep). We shall have the authority to Sweep the account at anytime; however, we agree not to Sweep the account more frequently than once each week so long as Area Operator is not in default of this Agreement or any other Agreement between Area Operator and Noodles & Company. We have the right to review your sales numbers on a daily basis. As early as the first business day, or any day we choose thereafter, following a Reporting Period, we shall calculate the Royalty Fee due for that Reporting Period and Sweep such amount and any other amounts due under this Agreement, including any advertising and marketing fees set forth under Section 10, directly from the designated account. All costs and expenses of establishing and maintaining such designated account, including transaction fees and wire transfer fees, shall be paid by you. You agree to maintain at all times sufficient funds in such designated bank accounts for such Sweeps and your failure to do so is a material breach of this Agreement. You agree to execute all forms necessary to permit Noodles & Company to accomplish all Sweeps in a timely and efficient manner. You agree not to terminate our right to withdraw funds from the designated account during The Term of this Agreement without our prior written consent.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, a failure to adequately maintain a bank account occurs if the Area Operator does not maintain adequate resources in the designated bank account to fully and timely satisfy all Sweeps of the account that Noodles & Company is permitted to make under the agreement.
Prior to opening a Noodles & Company restaurant, a franchisee must establish a designated bank account. Noodles & Company is authorized to withdraw funds from this account for amounts due, including Royalty Fees and Marketing Funds, through a process called a "Sweep." While Noodles & Company has the authority to Sweep the account at any time, they agree not to do so more frequently than once each week, provided the Area Operator is not in default of the agreement.
The franchisee is responsible for all costs associated with establishing and maintaining the designated account, including transaction and wire transfer fees. Maintaining sufficient funds in the account for Sweeps is critical, and failure to do so constitutes a material breach of the agreement. The franchisee must also execute all necessary forms to allow Noodles & Company to perform Sweeps efficiently and cannot terminate Noodles & Company's withdrawal rights without prior written consent during the term of the agreement.