What constitutes a material breach of the Noodles & Company franchise agreement regarding the designated bank account?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
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 Noodles & Company's 2025 Franchise Disclosure Document, a material breach of the franchise agreement occurs if the franchisee fails to maintain sufficient funds in the designated bank account for Noodles & Company to perform its authorized withdrawals, also known as Sweeps. This designated account must be established before the restaurant opens, and Noodles & Company is authorized to withdraw amounts due to them, including Royalty Fees and Marketing Funds.
The agreement specifies that the franchisee is responsible for all costs associated with maintaining the designated account, including transaction and wire transfer fees. The franchisee must also execute all necessary forms to allow Noodles & Company to conduct Sweeps in a timely manner and cannot terminate Noodles & Company's withdrawal rights without prior written consent during the term of the agreement.
In practical terms, a Noodles & Company franchisee must ensure that the designated bank account always has enough funds to cover the Royalty Fees, Marketing Funds, and any other amounts owed to Noodles & Company. Failure to do so gives Noodles & Company grounds to consider the franchisee in material breach of the agreement, potentially leading to termination of the franchise agreement.