Does the definition of 'Transfer' for a Noodles & Company franchise include involuntary sales or assignments?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
"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.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, the definition of "Transfer" includes both voluntary and involuntary actions. This is important for prospective franchisees to understand because it means that any change in ownership, whether planned or unplanned, is subject to Noodles & Company's approval.
The definition of "Transfer" is broad, encompassing not only direct sales or assignments but also indirect transfers such as changes in ownership structure, mergers, or transfers resulting from divorce, insolvency, or death. Specifically, the definition includes any transfer in, or as a result of, a divorce, insolvency, corporate or partnership dissolution proceeding or otherwise by operation of law. It also includes 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 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.
This means that franchisees need to be aware that events like death, divorce, or financial difficulties could trigger a transfer of the franchise, requiring Noodles & Company's consent. The franchisor maintains significant control over who can operate a Noodles & Company franchise, even in situations where the franchisee does not voluntarily choose to sell or assign it. This level of control is typical in franchising, as franchisors want to protect their brand standards and ensure that all franchisees meet their operational and financial criteria.
For a prospective Noodles & Company franchisee, this highlights the importance of succession planning and ensuring that appropriate legal and financial arrangements are in place to address unforeseen circumstances. It also underscores the need to understand and comply with all transfer requirements outlined in the Franchise Agreement to avoid any breaches or disputes with Noodles & Company.