What happens if a Noodles & Company franchisee is not current on all monetary obligations due to Noodles & Company before opening?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
pay for damages of any claim for which Area Operator would otherwise be entitled to indemnification arises only if and to the extent that Area Operator's insurance coverage does not or would not (absent any right to indemnification by Noodles & Company) provide coverage for such claims. In the event that Area Operator has failed to obtain and keep in force all policies that it is obligated to carry under the terms of its agreements with Noodles & Company and one or more of such policies would or could have provided coverage for the claim, then Noodles & Company is not obligated to indemnify, defend or pay damages, settlements, or have any liability for such claim.
6. FEES.
6.01 Franchise Fee. You agree to pay us a nonrefundable franchise fee of $35,000 ("Franchise Fee"). The Franchise Fee is payable upon execution of this Agreement or when Construction is Commenced for the Premises for such Noodles & Company Restaurant, whichever first occurs. The Franchise Fee is non-refundable, in whole or in part, under any circumstances. The Franchise Fee for the first Restaurant developed by you (and the first $10,000 of the Franchise Fee for each other Restaurant) is deemed paid so long as the Development Fee under the Development Agreement has been timely paid in full; accordingly, the balance of the $25,000 for each Restaurant after the first one shall be paid upon execution of the Franchise Agreement, when Construction is Commenced or the date the franchised restaurant is required to be open under The Area Development Agreement, whichever first occurs.
6.02 Royalty Fees. You agree to pay us a continuing royalty fee in the amount of 5.0% of Net Royalty Sales (the "Royalty Fee") for each Reporting Period. A Reporting Period shall be defined as each one week period commencing on Wednesday and ending on Tuesday, or such other period as we shall determine from time to time. A Sweep Period shall be the period of time for which a Sweep of Area Operator's account has been made by Noodles & Company to obtain the Royalty Fee for Net Royalty Sales that have occurred, but for which a prior Sweep was not made.
6.03 Continuing Royalty Upon Default. Should this Agreement terminate due to a material breach or default by you, or should you fail to continuously operate your Noodles & Company Restaurant without our prior written approval to cease continuous
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, a Noodles & Company franchisee must establish a designated bank account before opening their restaurant. This account allows Noodles & Company to withdraw funds for fees.
According to the FDD, the franchisee must pay a $35,000 franchise fee. The franchise fee is payable upon the execution of the agreement or when construction is commenced for the premises for such Noodles & Company Restaurant, whichever first occurs. The franchise fee is non-refundable, in whole or in part, under any circumstances. For the first restaurant developed by the franchisee, the first $10,000 of the franchise fee is considered paid if the development fee under the Development Agreement has been paid in full and timely. The balance of $25,000 for each restaurant after the first one must be paid upon the execution of the Franchise Agreement, when Construction is Commenced, or the date the franchised restaurant is required to be open under The Area Development Agreement, whichever first occurs.
Noodles & Company also requires franchisees to pay a continuing royalty fee of 5.0% of Net Royalty Sales for each Reporting Period. A Reporting Period is defined as each one-week period commencing on Wednesday and ending on Tuesday, or another period determined by Noodles & Company. If the franchise agreement terminates due to a material breach or default by the franchisee, or if the franchisee fails to continuously operate their Noodles & Company Restaurant without prior written approval, the franchisee must pay a continuing royalty for each Reporting Period remaining in the entire initial term of the agreement. This amount is equal to the total Royalty Fees due from the franchisee for the preceding fifty-two (52) Reporting Periods divided by fifty-two (52). If the restaurant was open for fewer than fifty-two (52) Reporting Periods, the average of all Reporting Periods for which it was open will be used.