How will Noodles & Company exercise its discretion when making decisions affecting franchisees?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
Additionally, if applicable law shall imply such covenant, we and you acknowledge and agree that: (a) this Agreement (and the relationship of the parties which arises from this Agreement) grants us the discretion to make decisions, take actions and/or refrain from taking actions not inconsistent with your explicit rights and obligations hereunder that may affect favorably or adversely your interests; (b) we will use our judgment in exercising such discretion based on our assessment of our own interests and balancing those interests against the interests of the owners of Noodles & Company Restaurants generally (including ourselves, and our Affiliate and other Area Operators), and specifically without considering your individual interests or the individual interests of any other particular Area Operator; (c) we will have no liability to you for the exercise of our discretion in this manner so long as such discretion is not exercised in bad faith toward you; and (d) in the absence of such bad faith, no trier of fact in any legal action or arbitration proceeding shall substitute its judgment for our judgment so exercised.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, Noodles & Company has the discretion to make decisions that may affect a franchisee's interests, whether favorably or adversely. Noodles & Company will use its judgment based on its own interests, balancing them against the interests of all Noodles & Company restaurants, including its affiliates and other area operators. However, Noodles & Company will specifically avoid considering the individual interests of any particular franchisee.
Noodles & Company will not be liable to franchisees for how it exercises its discretion, provided it is not done in bad faith. The FDD states that, absent bad faith, no third party can override Noodles & Company's judgment in any legal action or arbitration. This reinforces Noodles & Company's decision-making authority and protects it from liability as long as its decisions are made in good faith and are consistent with the franchise agreement.
This arrangement is typical in franchising, where franchisors need the flexibility to manage the brand and system as a whole. However, it's crucial for prospective Noodles & Company franchisees to understand that their individual concerns may not be prioritized in Noodles & Company's decision-making process. Franchisees should carefully evaluate whether they are comfortable with this level of franchisor discretion and the potential impact on their specific business.