If Noodles & Company exercises its option to purchase, what are they entitled to regarding representations and warranties?

According to Noodles & Company's 2025 Franchise Disclosure Document, if Noodles & Company exercises its option to purchase assets from an Area Operator upon the expiration or termination of the franchise agreement, they are entitled to certain representations and warranties. Specifically, Noodles & Company is entitled to customary representations and warranties that the assets are free and clear, or if not, that there is accurate and complete disclosure regarding several key aspects.

The representations and warranties that Noodles & Company is entitled to cover: (1) ownership, condition, and title of the assets; (2) any liens and encumbrances affecting the assets; (3) environmental and hazardous substances related to the assets; and (4) the validity of contracts and liabilities that could affect the assets, whether those liabilities are contingent or otherwise. This means Noodles & Company wants assurance that the Area Operator has clear ownership, that the assets are in acceptable condition, and that there are no hidden legal or environmental issues that could create future problems or costs.

For a prospective franchisee, this clause highlights the importance of maintaining accurate records and ensuring compliance with all relevant regulations throughout the term of the franchise agreement. It also underscores the need to keep the assets in good condition and to disclose any potential issues upfront. Failure to do so could lead to complications or disputes if Noodles & Company decides to exercise its option to purchase the assets upon termination or expiration of the agreement. This provision protects Noodles & Company from assuming unknown liabilities or inheriting problematic assets when taking over a restaurant location.