What were the franchising royalties and fees, and other revenue for Noodles & Company in 2024?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
Revenue consists of sales from restaurant operations and franchise royalties and fees. Revenue from the operation of companyowned restaurants is recognized when sales occur. The Company reports revenue net of sales and use taxes collected from customers and remitted to governmental taxing authorities.
Royalties from franchise restaurants are based on a percentage of restaurant revenues and are recognized in the period the related franchised restaurants' sales occur. Development fees and franchise fees, portions of which are collected in advance, are nonrefundable. The Company has determined that the initial franchise services are not distinct from the continuing rights or services offered during the term of the franchise agreement and should be treated as a single performance obligation; therefore, such fees are recognized in income ratably over the term of the related franchise agreement or recognized upon the termination of the agreement between the Company and the franchisee.
The Company recognized revenue of $0.3 million, $0.2 million and $0.1 million in 2024, 2023 and 2022, respectively related to initial fees from franchisees that were included in the contract liability balance at the beginning of the year. The Company expects to recognize approximately $0.1 million each fiscal year through fiscal 2029 and approximately $0.6 million thereafter related to performance obligations that are unsatisfied as of December 31, 2024.
The lease income on these locations has been recorded in "Franchising royalties and fees, and other"
Source: Item 22 — CONTRACTS (FDD pages 98–99)
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, revenue from franchise royalties and fees, along with other sources, is recognized as part of the company's overall revenue stream. For Noodles & Company, royalties from franchise restaurants are calculated as a percentage of the restaurants' revenues. These royalties are recognized during the same period that the franchised restaurants record their sales.
In addition to royalties, Noodles & Company also collects development and franchise fees, some of which are received in advance. These fees are nonrefundable. The company considers the initial franchise services to be integrated with the ongoing rights and services provided throughout the franchise agreement. As a result, these fees are treated as a single performance obligation and are recognized as income proportionally over the term of the franchise agreement or upon the termination of the agreement.
In 2024, Noodles & Company recognized $0.3 million in revenue related to initial fees from franchisees. This revenue was derived from amounts that were already held as a contract liability at the beginning of the year. Furthermore, the company anticipates recognizing approximately $0.1 million each fiscal year through 2029 and about $0.6 million thereafter, which is related to performance obligations that remained unsatisfied as of December 31, 2024. The lease income on locations sold to franchisees has been recorded in "Franchising royalties and fees, and other".