What constitutes the 'total development cost' for a Noodles & Company restaurant when calculating the required equity contributions?

According to Noodles & Company's 2025 Franchise Disclosure Document, when franchisees develop a Noodles & Company restaurant, they must receive equity contributions from their owners equal to at least 25% of the restaurant's total development cost. For the purpose of calculating this equity contribution, the total development cost specifically includes the cost of all leasehold improvements, furniture, fixtures, and equipment.

This requirement ensures that franchisees have a significant financial stake in their Noodles & Company restaurants and are not solely reliant on debt financing. By requiring a minimum equity contribution, Noodles & Company aims to promote financial stability and commitment among its franchisees. This also aligns with common franchising practices where franchisors seek to ensure that franchisees have sufficient capital to successfully launch and operate their businesses.

Prospective Noodles & Company franchisees should carefully consider these equity requirements when planning their financing strategy. They need to accurately estimate the costs associated with leasehold improvements, furniture, fixtures, and equipment to determine the necessary equity contributions from owners. It is also important to note that incurring debt beyond what is permitted requires the prior written consent of Noodles & Company.