Is a Noodles & Company franchisee allowed to be a Publicly Held Entity during the term of the agreement?

According to the 2025 Noodles & Company Franchise Disclosure Document, a franchisee is restricted from being a Publicly Held Entity during the term of the Franchise Agreement. The FDD states that neither the franchisee, nor their partners, shareholders, members of an LLC, nor the entity formed to operate the Noodles & Company restaurants, may be or become a Publicly Held Entity during the term of the agreement.

This restriction ensures that Noodles & Company maintains control over the ownership and management of its franchises. By preventing franchisees from becoming publicly held, Noodles & Company can limit the potential for changes in ownership or control that could impact the brand's standards and reputation. This is a fairly standard clause in franchise agreements, as franchisors typically want to maintain tight control over who is operating their branded locations.

Furthermore, the organizational documents of the franchisee's business entity must state that the issuance, transfer, or pledge of any direct or indirect legal or beneficial ownership interest is restricted by the terms of the Franchise Agreement. All certificates representing ownership interests must also bear a legend referring to these restrictions. This requirement reinforces the franchisor's control over ownership changes and helps to prevent unauthorized transfers of ownership interests. These measures help Noodles & Company ensure that franchisees remain committed to the brand and its standards throughout the term of the agreement.