What happens to the Earnest Money Deposit for a Noodles & Company franchise if the transaction does not close?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
The Initial Earnest Money Deposit and the Additional Earnest Money Deposit (collectively, the "Earnest Money Deposit") shall be applied to the Purchase Price at Closing.
In the event the transaction contemplated by this Agreement does not close, the Earnest Money Deposit shall be disbursed in accordance with Article XI or as otherwise set forth in this Agreement.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, the Earnest Money Deposit, which includes the Initial Earnest Money Deposit and the Additional Earnest Money Deposit, is applied to the purchase price at closing if the transaction is completed. However, if the transaction does not close, the Earnest Money Deposit will be disbursed in accordance with Article XI of the agreement or as otherwise specified in the agreement.
This means that the specific conditions under which the Earnest Money Deposit is returned or forfeited will depend on the detailed terms outlined in Article XI of the franchise agreement or other relevant sections. A prospective Noodles & Company franchisee should carefully review these sections to understand the circumstances that would lead to either a return of the deposit or its forfeiture.
Understanding the conditions for disbursement is crucial, as it directly impacts the franchisee's financial risk. It is advisable for potential franchisees to seek legal counsel to fully comprehend the implications of these terms before signing the agreement. This will ensure they are aware of their rights and obligations regarding the Earnest Money Deposit in case the transaction does not proceed as planned.