After the Noodles & Company Franchise Agreement expires or terminates, does Section 5.02 remain in effect?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
For a continuous uninterrupted period commencing upon the expiration or termination of the Franchise Agreement and for two years thereafter, you and your Owners, shall not, without Noodles & Company's prior written consent, either directory or indirectly, for yourself or through, on behalf of, or in conjunction with any person, persons, partnership, limited liability company, or corporation:
- (a) Divert or attempt to divert any business or customer of any Noodles & Company Restaurant to any competitor, by direct or indirect inducement or otherwise, or
do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with Noodles & Company's Marks or the System.
(b) [Intentionally omitted]
(c) Own, maintain, advise, be employed by, consult for, make loans to, operate, engage in or have an ownership interest (including any right to share in revenues or profits) in any Competitive Business which is, or is intended to be located within:
(1) the Protected Area;
(2) a radius of 15 miles from your Noodles & Company Restaurant;
(3) a radius of 15 miles of any Noodles & Company Restaurant; or
(4) any Designated Market Area (as defined by Nielsen Media Research) where any Noodles & Company Restaurant is located.
-
Notwithstanding the foregoing, you will have no obligation under Section 5 or Section 6 after the second anniversary of the later of (a) the date you cease to have an ownership interest in Franchisee or (b) the date you cease to render services to Franchisee.
You and each of your Owners expressly acknowledge the possession of skills and abilities of a general nature and the opportunity to exploit such skills in other ways, so that enforcement of the covenants contained in Sections 5 and 6 will not deprive any of you of your personal goodwill or ability to earn a living.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, Section 5 regarding post-term covenants remains in effect after the expiration or termination of the Franchise Agreement. Specifically, Section 6 states that the restrictions outlined in Section 5 apply for a continuous, uninterrupted period of two years following the agreement's end. These restrictions prevent the franchisee and their owners from diverting business, engaging in activities harmful to Noodles & Company's goodwill, or participating in competitive businesses within specified geographic areas. These areas include the Protected Area, a 15-mile radius from the franchisee's Noodles & Company restaurant, a 15-mile radius of any Noodles & Company restaurant, or any Designated Market Area where a Noodles & Company restaurant is located.
However, these obligations cease after the second anniversary of the later of (a) the date the franchisee ceases to have an ownership interest in the Franchisee or (b) the date they cease to render services to the Franchisee. This means that the restrictions are tied to both ownership and active involvement in the franchise.
The FDD also states that franchisees and their owners acknowledge their general skills and opportunities to use them in other ways, implying that these post-term covenants should not deprive them of their ability to earn a living. This is a common clause intended to make the non-compete agreement more enforceable. Overall, prospective Noodles & Company franchisees should carefully consider the implications of these post-term covenants, particularly the geographic restrictions and the duration of their applicability, as they could significantly impact their future business opportunities after leaving the Noodles & Company system.