tain from us for which we charge $1000 per month, per restaurant.

ITEM 12 TERRITORY

Franchise Agreement.

You will not receive an exclusive territory under the Franchise Agreement. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control. The Franchise Agreement grants to you the right to own and operate a Noodles & Company restaurant at a specific location during the term of the agreement. You may not conduct the business of your Noodles & Company at any site other than that location. You may not relocate your Noodles & Company restaurant without our prior written consent. We will evaluate any proposed relocation site based on the then-current criteria we use to evaluate prospective franchise restaurant sites. The Franchise Agreement does not provide you with any options, rights of first refusal or similar rights to acquire additional franchises.

During the term of your Franchise Agreement, and provided you are in compliance with the Franchise Agreement and any other agreements with us or our affiliates and are current on all obligations due to us or our affiliates, we will not operate (directly or through an affiliate), nor grant to another person the right to operate, any Noodles & Company restaurant located within a geographical area surrounding your Noodles & Company restaurant that we specify in an exhibit to the Franchise Agreement ("Protected Area"). This restriction will not apply to any restaurant(s) in operation or under lease or construction or other commitment to open before execution of your Franchise Agreement. The Protected Area will be determined using our then current standards and will be determined before we sign the Franchise Agreement based on the location of the restaurant within the mutually agreed upon trade areas. The factors to be considered include, for example, population density, site economics and the residential or commercial character of the area.

Our Reservation of Rights.

Except for the rights expressly granted to you under the Franchise Agreement, we retain all of our rights in and discretion to use the Marks and the System and to operate Noodles & Company restaurants anywhere in the world.

Because certain locations within the Protected Area are by their nature unique and separate in character from the sites to which we intend to grant you a franchise, those sites are referred to as "Non-Traditional Venues." Non-Traditional Venues are excluded from the Protected Area and we have the right to develop (by direct ownership, franchising, licensing) those locations even if those sites are located within the Protected Area and regardless of the proximity of those sites to any other Noodles & Company restaurant. Non-Traditional Venues include, for example: (1) transportation facilities, including airports, train stations, subways and rail and bus stations; (2) military bases and government offices; (3) sports facilities, including stadiums and arenas; (4) amusement parks, zoos and convention centers; (5) car and truck rest stops and travel centers and limited access highway oasis and rest and service areas; (6) casinos; (7) food courts; (8) Indian reservations and (9) museums.

We also reserve the following rights:

• (1) To operate and license others to operate Noodles & Company restaurants at any location outside of your Protected Area(s), subject to the restrictions on us operating or licensing others to operate Noodles & Company restaurants within a Development Area, as discussed below.
• (2) To operate and license others to operate Noodles & Company restaurants at any location within your Protected Area(s) after the Franchise Agreements terminates or expires.
• (3) To manufacture, distribute and sell products in your Protected Area(s) that are the same or similar to products sold in Noodles & Company restaurants using brand names that are similar to or the same as the Marks through any channel of distribution, including, for example, grocery stores, supermarkets, convenience stores, caterers and gas stations.
• (4) To sell products and services to persons located in your Protected Area(s) through other channels of distribution including, for example, the Internet, wholesale, mail-order and catalog. The Internet is a channel of distribution reserved exclusively to us, and you may not independently market your Noodles & Company restaurant or use the Marks on the Internet or in any form of electronic commerce without our prior approval.
• (5) To operate and license others to operate other concept restaurants in your Protected Area(s).
• (6) To develop and/or own other franchise systems that operate in your Protected Area(s) and that sell the same or similar products and services as you using different trademarks than those licensed to you.
• (7) To produce, license, manufacture, sell, distribute and market Noodles & Company brand-named products, and products bearing other marks, including food and beverage products, clothing, souvenirs and novelty items in your Protected Area(s) through any channel of distribution, including, for example, grocery stores, supermarkets, convenience stores, caterers and gas stations.
• (8) To purchase or be purchased by, or merge or combine with, competing businesses wherever located.

Continuance of the limited restrictions on our ability to operate and license others to operate Noodle & Company restaurants in the Protected Area is not contingent on you achieving a certain sales volume, market penetration or other contingency. The size of your Protected Area may not be altered except if we mutually agree to modify the size in writing. We do not restrict the areas in which you may advertise or solicit customers. However, you do not have the right to use other channels of distribution, including the Internet, catalog sales, telemarketing or other direct marketing.

Area Development Agreement.

You will not receive an exclusive territory under the Area Development Agreement. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control. The Area Development Agreement grants you the right to develop an agreed upon number of Noodles & Company restaurants within a geographical area described in Exhibit A to the Area Development Agreement (the "Development Area"). Except as described below, during the term of the Development Agreement, we will not operate (directly or through an affiliate), nor license anyone else to operate, any Noodles & Company restaurants located within the Development Area. The size of the Development Area will depend on the number of Noodles & Company restaurants suitable for the Development Area and the trade areas within the Development Area, as we and you determine in light of a number of factors, including, for example, population density, site economics and the residential or commercial character of the area. The Development Area will generally be a metropolitan area or part of a metropolitan or substantial suburban area. The number of Noodles & Company restaurants and the dates they are to be open, and operating will also be set out in Exhibit A to the Area Development Agreement (the "Development Schedule"). The Area Development Agreement does not provide you with any certain options, rights of first refusal or similar rights to acquire or develop additional Noodles & Company restaurants in the Development Area or in any other area. We describe the site selection process in Item 11.

Under the Area Development Agreement, we first must approve each new site you propose for each new Noodles & Company restaurant. As noted in Item 11, our Real Estate Site Approval Committee meets approximately every four weeks, and you must submit your site package at least one week before each meeting so we have time to review and consider it. We generally respond with approval or rejection of a proposed site within 45 days after we receive all information we have requested.

Our Reservation of Rights.

You do not have the right or license under the Area Development Agreement to use any trademarks, trade names, service marks, logotypes, insignias, trade dress or designs owned by Noodles & Company. The Area Development Agreement does not authorize you to own or operate a Noodles & Company restaurant. That right is granted under a Franchise Agreement.

During the term of your Area Development Agreement, provided you and your affiliates are in compliance with the Area Development Agreement and all other agreements with us or any of our affiliates (including any Franchise Agreements), we will not operate (directly or through an affiliate), nor license anyone else to operate, any Noodles & Company restaurants located within the Development Area. This restriction does not include: (1) restaurants you operate in the Development Area under other Franchise Agreements with us, (2) Noodles & Company restaurants in your Development Area that are open and operating or under lease, construction or other commitment to open at the time your sign your Area Development Agreement and (3) locations in your Development Area that are Non-Traditional Venues, as described above.

Except for the rights specifically granted to you, we reserve the following rights:

• (1) To operate and license others to operate Noodles & Company restaurants at any location outside of your Development Area.
• (2) To operate and license others to operate Noodles & Company restaurants at any location within your Development Area (other than within the Protected Area for any of your then-operating Noodles & Company restaurants) after the Area Development Agreement terminates or expires.
• (3) To manufacture, distribute and sell products in your Development Area that are the same or similar to products sold in Noodles & Company restaurants using brand names that are similar to or the same as the Marks through any channel of distribution, including, for example, grocery stores, supermarkets, convenience stores, caterers and gas stations.
• (4) To sell products and services to persons located in your Development Area through other channels of distribution including, for example, the Internet, wholesale, mail-order and catalog. The Internet is a channel of distribution reserved exclusively to us, and you may not independently market your Noodles & Company restaurant or use the Marks on the Internet or in any form of electronic commerce without our prior approval.

Source: Item 12 — TERRITORY (FDD pages 48–53)