For a Noodles & Company franchise, what form of payment is required for the amount payable at closing?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
failure to have sufficient funds available in the designated account in an amount equal to any amount then due or your failure to pay all amounts when due, constitutes grounds for termination of this Agreement, as provided in Section 15, and shall be a default of all other agreements by and between you and us and shall constitute grounds for termination of said agreements.
6.06 Application of Payments. We may apply any payments by you to any of your past due indebtedness for Royalty Fees, Marketing Fund contributions or any other indebtedness to us or any of our Affiliates, notwithstanding any designation by you. We may also apply said payments first to interest payments due. We may also collect any and all fees, payments or other amounts due from you by electronic withdrawal.
6.07 Letter of Credit. Noodles & Company may require Area Operator to provide a letter of credit from a national bank and on terms set forth in the Operations Manual equal to 150% of all fees (including Royalty Fees, Marketing Funds, interest and other payments to us) anticipated to be due annually under all agreements between the parties in the event of any failure of Area Operator to timely pay all fees due. Area Operator shall supply said letter of credit within 15 days of our request.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
The 2025 Franchise Disclosure Document for Noodles & Company specifies that the method of payment for fees can include electronic withdrawal. Specifically, Noodles & Company can collect any and all fees, payments, or other amounts due from the franchisee through electronic withdrawal.
Noodles & Company may also require the Area Operator to provide a letter of credit from a national bank. This letter of credit would be on terms set forth in the Operations Manual and equal to 150% of all fees anticipated to be due annually under all agreements between the parties. These fees include Royalty Fees, Marketing Funds, interest, and other payments to Noodles & Company. The Area Operator must supply the letter of credit within 15 days of Noodles & Company's request. Failure to provide the letter of credit in a timely manner constitutes a material breach and default of the agreement.
Additionally, all payments of Royalty Fees, Marketing Funds, and other payments due to Noodles & Company from the franchisee are due and payable on the first day following the close of the Reporting Period, referred to as the "Due Date". If any payment is overdue, Noodles & Company can charge interest on the overdue amount from the date it was due until paid. The interest rate is the lesser of 1.5% per month or the maximum rate permitted by law.