When is the Development Fee considered fully earned by Noodles & Company?

According to Noodles & Company's 2025 Franchise Disclosure Document, the Development Fee and each Franchise Fee are fully earned by Noodles & Company at the time they are paid. The Development Fee is nonrefundable, even if the franchisee fails to develop or open the restaurants as agreed. This means that once Noodles & Company receives the Development Fee, it is considered earned and will not be returned to the franchisee under any circumstances, even if the franchisee does not fulfill their development obligations.

For prospective Noodles & Company franchisees, this policy highlights the importance of careful planning and due diligence before entering into a development agreement. Franchisees should ensure they have the resources and capabilities to meet the development schedule outlined in Exhibit A of the Area Development Agreement. The initial Development Fee for the first restaurant is $35,000, with subsequent restaurants incurring a $10,000 Development Fee. Failing to meet the development obligations will result in the franchisee losing the nonrefundable Development Fees paid to Noodles & Company.

This practice of nonrefundable fees is common in franchising, as the franchisor incurs costs in evaluating and approving the franchisee, as well as reserving the territory for development. However, the franchisee bears the risk of forfeiting these fees if they cannot fulfill their obligations. Therefore, it is crucial for prospective Noodles & Company franchisees to thoroughly assess their financial and operational capabilities before committing to a development agreement and paying the Development Fee.