What constitutes a transfer of development rights under the Noodles & Company agreement?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
"System" – The business methods, designs and arrangements for developing and operating Noodles & Company Restaurants, including the Marks, building specifications, design and layouts, trade dress, signage, equipment, ingredients, recipes, methods of preparation and specifications for authorized food products, food safety procedures, training, methods of inventory control, vendor base, and certain operating and business standards, policies and procedures, all of which we may improve, further develop or otherwise modify from time to time.
"Then Current Franchise Agreement" – Means the Franchise Agreement being offered to and executed by new franchisees as of the relevant date.
"Transfer" or "Transfer the Franchise" – Or similar words - The voluntary, involuntary, direct or indirect sale, assignment, transfer, license, sublicense, sublease, collateral assignment, grant of a security, collateral or conditional interest, inter-vivos transfer, testamentary disposition or other disposition of this Agreement, any interest in or right under this Agreement, or any form of ownership interest in you or the assets, revenues or income of your Noodles & Company Restaurants including: (1) any transfer, redemption or issuance of a legal or beneficial ownership interest in the capital stock of, or other ownership interest in, you or of any interest convertible to or exchangeable for capital stock of, or other ownership interest in, Area Operator; (2) any merger or consolidation between you and another entity, whether or not you are the surviving corporation; (3) any transfer in, or as a result of, a divorce, insolvency, corporate or partnership dissolution proceeding or otherwise by operation of law; (4) any transfer upon your death or the death of any of your Principal Owners by will, declaration of or transfer in trust or under the laws of interstate succession; or (5) any foreclosure upon your Noodles & Company Restaurants or the transfer, surrender or loss by you of possession, control or management of your Noodles & Company Restaurants.
"Your Noodles & Company Restaurant" or "the Restaurant" – The Noodles & Company Restaurants you operate at the Premises. The plural includes all your Noodles & Company Restaurants.
* Any capitalized term not defined in this Section shall have the same meaning as otherwise prescribed in this Agreement.
2. GRANT OF RIGHTS.
2.01 Grant of Franchise and Term.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, a "Transfer" or "Transfer the Franchise" includes any voluntary, involuntary, direct, or indirect sale, assignment, transfer, license, sublicense, sublease, collateral assignment, grant of a security, collateral or conditional interest, inter-vivos transfer, testamentary disposition, or other disposition of the Area Development Agreement, any interest in or right under the Area Development Agreement, or any form of ownership interest in the franchisee or the assets, revenues, or income of their Noodles & Company Restaurants.
Specifically, this encompasses several scenarios: (1) any transfer, redemption, or issuance of a legal or beneficial ownership interest in the capital stock of, or other ownership interest in, the franchisee or of any interest convertible to or exchangeable for capital stock of, or other ownership interest in, Area Operator; (2) any merger or consolidation between the franchisee and another entity, regardless of whether the franchisee is the surviving corporation; (3) any transfer in, or as a result of, a divorce, insolvency, corporate or partnership dissolution proceeding, or otherwise by operation of law; (4) any transfer upon the death of the franchisee or any of their Principal Owners by will, declaration of or transfer in trust or under the laws of interstate succession; or (5) any foreclosure upon the franchisee's Noodles & Company Restaurants or the transfer, surrender, or loss by the franchisee of possession, control, or management of their Noodles & Company Restaurants.
Noodles & Company requires that the franchisee receive prior written consent from them for any transfer of development rights, which Noodles & Company may withhold at their sole discretion. Any transfer without this approval is considered a breach of the Area Development Agreement and is void. The franchisee is also prohibited from directly or indirectly subfranchising or sublicensing any of their rights under the agreement.