What is the effect of Noodles & Company's approval of a transfer of development rights?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
Our approval of a Transfer of the Development Rights does not constitute: (a) a representation as to the fairness of the terms of any agreement or arrangement between you or your Owners and the transferee or as to the prospects for success by the transferee; or (b) a release of you and your Owners, a waiver of any claims against you or your Owners, or a waiver of our right to demand the transferee's compliance with this Agreement.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, the company's approval of a transfer of development rights does not constitute a representation regarding the fairness of any agreements between the transferor and transferee. This means Noodles & Company is not vouching for the financial terms or any other arrangements made between the parties involved in the transfer. A prospective franchisee should not assume that Noodles & Company's approval indicates the deal is a good one.
Furthermore, Noodles & Company's approval does not act as a release of the transferor (the original developer) from any existing obligations or claims. Noodles & Company retains all rights to demand compliance with the Area Development Agreement from the transferee (the new developer). This protects Noodles & Company's interests by ensuring the new developer adheres to the established terms and conditions.
In practical terms, a franchisee looking to transfer development rights should understand that Noodles & Company's approval is simply an acknowledgment that the transfer meets their requirements. It is not an endorsement of the transfer's financial terms or a guarantee of the transferee's success. Both the transferor and transferee should conduct their own due diligence and seek independent legal and financial advice to ensure the transfer is beneficial for them.