What is the difference between 'Leased Properties' and 'Subleased Properties' for a Noodles & Company franchise?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
(i) If, prior to Closing, any material portion of a Leased or Subleased Property is taken by, becomes subject to proceedings for, or is voluntarily sold under threat of, eminent domain (a "Taking"), such that such property would no longer be reasonably suitable for the operation of a Noodles & Company restaurant, Seller shall notify Buyer thereof and either Buyer or Seller may terminate this Agreement only insofar as it relates to such Leased or Subleased Property upon notice given to the other Party within ten (10) days after such notice of Taking from Seller, and the Purchase Price shall be equitably adjusted as determined by Buyer and Seller. If, following a Taking, neither Buyer nor Seller elects to terminate this Agreement as to such property in accordance with this Section, then: (a) there shall be no reduction of the Purchase Price as a result of such Taking, (b) Seller shall pay to Buyer all proceeds theretofore or thereafter received by Seller with respect to such Taking, (c) Seller shall assign to Buyer all rights of Seller in and to such Taking proceeds, (d) Buyer shall accept such property at Closing in its then present "as is" condition, and (e) in no event shall the Closing be delayed as a result of such Taking. In the event of a Taking of all or a portion of a Subleased Property that results in termination of the Prime Lease for such Subleased Property prior to Closing, then this Agreement shall terminate only insofar as it relates to such
Subleased Property, and the Purchase Price shall be equitably adjusted as determined by Buyer and Seller.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, the distinction between 'Leased Properties' and 'Subleased Properties' becomes relevant in the event of eminent domain or casualty affecting the restaurant location prior to closing.
In such a scenario, if a material portion of either a Leased or Subleased Property is taken by eminent domain, rendering it unsuitable for a Noodles & Company restaurant, either the seller or buyer has the option to terminate the agreement specifically for that property. If neither party chooses to terminate, the buyer receives all proceeds from the taking, accepts the property in its current condition, and the closing is not delayed.
However, there's a specific condition for Subleased Properties: if a taking affects a Subleased Property and results in the termination of the prime lease before closing, the agreement terminates specifically for that subleased property. This clause highlights a potential added layer of complexity and risk associated with subleased properties compared to leased properties, as the termination of the prime lease can directly impact the franchise agreement.