What is the geographic scope of the non-competition covenant after transferring a Noodles & Company franchise?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
- (k) you and your Owners must execute a non-competition covenant, in form and substance satisfactory to us, in favor of us and the transferee agreeing that, for a period of two years, starting on the effective date of the Transfer, you and your Owners will not directly or indirectly (such as through members of his/her or Immediate Families) own any legal or beneficial interest in, or render services or give advice to: (1) any Competitive Business; or (2) any entity which grants franchises, licenses or other interests to others to operate any Competitive Business in any Designated Market Area (as defined by Nielsen Media Research) where a Noodles & Company Restaurant is located, whether Company-owned or franchised, or within any area that is or was within an Area Development Area or a Protected Area, as those terms are defined in the Area Development Agreement and this Agreement;
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, if you transfer your franchise, you and your owners must agree to a non-competition covenant. This covenant restricts you from owning, operating, or being involved with a Competitive Business for two years after the transfer date.
The geographic scope of this restriction includes any Designated Market Area (as defined by Nielsen Media Research) where a Noodles & Company restaurant is located, whether it's company-owned or franchised. It also extends to any area that is or was within an Area Development Area or a Protected Area, as defined in the Area Development Agreement and Franchise Agreement. This means the non-compete extends beyond just the immediate vicinity of your former restaurant.
This non-compete agreement is in favor of both Noodles & Company and the transferee. The covenant prevents you and your owners from directly or indirectly owning any legal or beneficial interest in, or rendering services or giving advice to a Competitive Business or any entity that grants franchises, licenses, or other interests to others to operate any Competitive Business within the specified geographic areas. This is a fairly standard practice in franchising to protect the brand and the new franchisee's investment.