Is a Noodles & Company franchisee required to sign a general release and non-compete agreement as a condition of transfer approval?

Question

Accepted Answer

| k. "Transfer" by you – defined                | Section 1.04  | Includes the sale, assignment, transfer, grant, testamentary or inter vivos disposition, or any other disposition of the agreement, any rights under the agreement, or any other ownership interest in you or your Noodles& Company restaurant; transfer, redemption or issuance of any ownership interest in your capital stock; any merger between you or any other entity; any transfer by operation of law (such as in divorce or as a result of insolvency or dissolution); any transfer upon the death of your principal owners and foreclosure or other loss of possession, control or management of your restaurant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|-----------------------------------------------|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| l. Our approval of transfer by | Section 14.01 | We have the right to approve all |
| you |  | transfers. |
| m. Conditions for our approval of transfer | Section 14.02 | Your Noodles & Company restaurant must be open and operating; you must be in compliance with Franchise Agreement and all other Agreements between us; the proposed transferee must be an entity that is not publicly held and meets our qualifications and standards for approval; the proposed transferee must complete all required training; the proposed transferee must agree to be bound by the existing Franchise Agreement and collateral documents or enter into a new Franchise Agreement (at our election); transfer fee must be paid; you must sign a general release and non compete agreement; we must approve price and payment terms; we must waive our right of first refusal; any financing you provide to the proposed transferee must be subordinate to the transferee's obligations to pay amounts due to us; there must have been no change in the law since we entered into the Franchise Agreement that would limit our right as to the proposed transferee; the proposed transferee must obtain assignment of leases from all landlords and obtain liquor and other licenses necessary to operate restaurant; and you must meet any other reasonable requirements we may impose to protect our rights.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 63–83)

Is a Noodles & Company franchisee required to sign a general release and non-compete agreement as a condition of transfer approval?

Answer from 2025 FDD Document

What This Means (2025 FDD)

k. "Transfer" by you – defined	Section 1.04	Includes the sale, assignment, transfer, grant, testamentary or inter vivos disposition, or any other disposition of the agreement, any rights under the agreement, or any other ownership interest in you or your Noodles& Company restaurant; transfer, redemption or issuance of any ownership interest in your capital stock; any merger between you or any other entity; any transfer by operation of law (such as in divorce or as a result of insolvency or dissolution); any transfer upon the death of your principal owners and foreclosure or other loss of possession, control or management of your restaurant.
l. Our approval of transfer by	Section 14.01	We have the right to approve all
you		transfers.
m. Conditions for our approval of transfer	Section 14.02	Your Noodles & Company restaurant must be open and operating; you must be in compliance with Franchise Agreement and all other Agreements between us; the proposed transferee must be an entity that is not publicly held and meets our qualifications and standards for approval; the proposed transferee must complete all required training; the proposed transferee must agree to be bound by the existing Franchise Agreement and collateral documents or enter into a new Franchise Agreement (at our election); transfer fee must be paid; you must sign a general release and non compete agreement; we must approve price and payment terms; we must waive our right of first refusal; any financing you provide to the proposed transferee must be subordinate to the transferee's obligations to pay amounts due to us; there must have been no change in the law since we entered into the Franchise Agreement that would limit our right as to the proposed transferee; the proposed transferee must obtain assignment of leases from all landlords and obtain liquor and other licenses necessary to operate restaurant; and you must meet any other reasonable requirements we may impose to protect our rights.