What are the implications of the litigation involving Noodles & Company (Item 3) on the franchisee's ability to transfer the franchise to a third party?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
Any approval shall apply only to the specific Transfer of the Franchise being proposed and shall not constitute an approval of, or have any bearing on, any other proposed Transfer of the Franchise.
14.04 Special Transfers. Neither Section 14.06 nor Section 14.02(g), shall apply to any Transfer of the Franchise among any of your then-current Owners. On 30 days' notice to us, you, if you are a partnership, may transfer this Agreement in conjunction with a transfer of all of the assets of your Noodles & Company Restaurant, by an agreement in form and substance approved by us, to a corporation or limited liability company which conducts no business other than the Noodles & Company Restaurant (and other Noodles & Company Restaurants under franchise agreements granted by us), and of which you own and control all of the equity and voting power of all issued and outstanding capital stock. None of the foregoing assignments shall relieve you or your Owners of your respective obligations hereunder, and you and your Owners remain jointly and severally liable for all obligations hereunder. We will also permit transfers among partners so long as the transfer is to a prior existing partner that was previously approved by us and who meets our then-current requirements for Area Operators.
14.05 Death or Disability of Area Operator.
(a) Upon your death or permanent disability, or the death or permanent disability of the Operating Partner or an Owner of a controlling interest in Area Operator, if we do not exercise our right of first refusal, the executor, administrator or other personal representative of such person shall transfer his interest in this Agreement or his interest in Area Operator to a third party approved by us in accordance with all of the applicable provisions of Section 14 within a reasonable period of time, not to exceed six months from the date of death or permanent disability. We agree not to exercise our right of first refusal in the case of death or disability if the proposed purchaser or transferee is a family member who meets our then-current requirements for Area Operators or is a prior existing partner that was previously approved by us and who meets our thencurrent requirements for Area Operators.
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the excerpts provided do not discuss how any litigation involving Noodles & Company, as detailed in Item 3, might specifically impact a franchisee's ability to transfer their franchise. However, the FDD does outline the general conditions and procedures for transferring a Noodles & Company franchise.
Specifically, the FDD states that any approval for a transfer applies only to the specific transfer being proposed and does not guarantee approval for future transfers. There are also special transfer conditions, such as transfers among current owners, which require a 30-day notice and adherence to specific corporate structuring and ownership requirements. In cases of death or disability, the executor or representative has a limited time (six months) to transfer the interest to a third party approved by Noodles & Company, with some exceptions for family members or existing partners who meet the company's requirements.
Because the provided excerpts do not address the impact of litigation on franchise transfers, it is important for a prospective franchisee to ask Noodles & Company directly about this potential impact. Clarification from the franchisor is needed to fully understand any restrictions or implications that pending or past litigation might have on the ability to transfer a franchise.