For a Noodles & Company franchise, when must the buyer deposit the Additional Earnest Money Deposit with the seller?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
The Initial Earnest Money Deposit and the Additional Earnest Money Deposit (collectively, the "Earnest Money Deposit") shall be applied to the Purchase Price at Closing.
In the event the transaction contemplated by this Agreement does not close, the Earnest Money Deposit shall be disbursed in accordance with Article XI or as otherwise set forth in this Agreement.
- (iii) The amount Buyer shall pay Seller for the Inventory shall be determined as follows: two weeks prior to the Closing Date representatives of both Buyer and Seller shall conduct a physical inventory of all items of Inventory at the Restaurants.
The value of the Inventory as of such time shall then mutually agreed upon prior to the Closing Date.
Promptly after the value of the Inventory has been determined in writing, Seller shall present to Buyer the written document setting forth the Inventory and the value of the Inventory.
Buyer shall thereafter have five (5) business days within which to review the written document setting forth the Inventory and the value of the Inventory and the work papers of Seller utilized in calculating same (which will be furnished to Buyer promptly on request) for purposes of verifying the accuracy and fairness of the value of the Inventory.
The value of the Inventory determined by Seller shall be binding on Buyer unless Buyer presents to Seller written notice of its disagreement within such five (5) business day period, specifying in reasonable detail, insofar as feasible, the nature and extent of Buyer's disagreement.
If Buyer does not provide to Seller such written notice of disagreement within such time period, Buyer shall, within twenty (20) days after the Closing Date, pay Seller for the Inventory in cash or other immediately available funds.
If Buyer does provide to Seller such written notice of disagreement, Buyer shall, concurrently with delivery of such written notice, pay Seller in cash or other immediately available funds for that portion of the value of the Inventory with which Buyer does not disagree.
Otherwise, Buyer's written notice of disagreement shall have no effect, as if it had never been given, and the value of the Inventory determined by Seller shall be binding on Buyer.
The Parties agree to use their good faith efforts to resolve such disagreement within fifteen (15) days after Seller receives written notice of such disagreement and partial payment from Buyer, at which time Buyer shall pay Seller
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, the Initial Earnest Money Deposit and the Additional Earnest Money Deposit are collectively referred to as the "Earnest Money Deposit." This entire deposit is applied to the purchase price at closing.
In the event that the transaction does not close, the Earnest Money Deposit will be disbursed according to Article XI of the agreement or as otherwise specified in the agreement. The timing of the Additional Earnest Money Deposit is not explicitly detailed in this excerpt; however, the excerpt does detail the procedure for determining the inventory value and payment thereof.
Specifically, two weeks before the closing date, representatives from both the buyer and seller will conduct a physical inventory of all items at the Noodles & Company restaurants. The value of the inventory will then be mutually agreed upon before the closing date. The seller will then present a written document to the buyer detailing the inventory and its value. The buyer has five business days to review this document and the seller's work papers to verify the accuracy and fairness of the inventory's valuation. If the buyer does not provide written notice of disagreement within this five-day period, they must pay the seller for the inventory in cash or immediately available funds within twenty days after the closing date. If the buyer does provide a written notice of disagreement, they must concurrently pay the seller for the portion of the inventory value they do not disagree with. The parties then agree to use good faith efforts to resolve the disagreement within fifteen days after the seller receives the notice and partial payment, at which time the buyer must pay the seller the remaining balance.