Must a Noodles & Company franchisee lease or purchase a location approved by Noodles & Company?

e and the manner in which those fees are paid is provided in Item 5.

• 1. You must lease or purchase a location approved by Noodles & Company and construct, remodel, alter and improve it to Noodles & Company's specifications. Lease and purchase costs are not included in the figures in the Item 7 table except as discussed in Note 8 and listed in Pre-Opening Cash Occupancy Costs. These estimates assume that the location will be a leased, unimproved, unfinished retail store-type unit. If you purchase a location, lease a free-standing building or lease a space in a multi-story structure, your initial investment may be much greater. A typical Noodles & Company restaurant will be located in a suburban or urban area on a major thoroughfare or adjacent to or part of a retail shopping center. For the restaurants included in the above table, occupancy costs which are comprised of base rent, percentage rent, CAM and real estate taxes (determined in accordance with generally accepted accounting principles) averaged $9,600 per month and ranged from approximately $6,900 to $13,600 per month. You must perform or have performed any construction, remodeling or additions necessary to cause the premises to conform to applicable federal, state, county and city laws, ordinances, codes and rules and regulations governing food services businesses, and that meet Noodles & Company's requirements for the layout, design, construction, fixtures, equipment, installation and trade dress appearance of a Noodles & Company location. The cost of purchasing or leasing and developing a site will vary widely depending upon the market, location, design, configuration and condition of the premises, the condition and configuration of existing services and facilities, such as, for example, air conditioning, electrical and plumbing, the terms of your lease and the local real estate market.
• 1. The construction costs presented include all significant costs incurred in constructing or remodeling a location to conform to Noodles & Company's standards, except for time incurred internally by staff to design the restaurant and manage the construction process. Costs include general contractor and subcontractor fees along with other costs to construct leasehold improvements to conform to Noodles & Company's standards. Construction costs can vary widely between sites. Factors that cause variances in construction costs include, but are not limited to, the labor market for construction in a particular market or trade area, the size of the restaurant, the configuration of a restaurant (such as End Cap, Inline, Freestanding), as well as the condition and configuration of existing services and facilities. Often, landlords provide allowances or free rent periods for tenant improvements. Allowances for tenant improvements and free rent periods are not necessarily commensurate with total construction costs incurred. For the restaurants included in the above table, Noodles & Company received an average tenant improvement ("TI") allowance and free rent totaling $120,000, and such allowances ranged from $79,000 to $184,000. Your total net cost to construct a Noodles & Company restaurant may vary significantly from the figures in this Item

Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 23–27)