What is included in the definition of 'Net Royalty Sales' for a Noodles & Company restaurant?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
"Net Royalty Sales" – The aggregate amount of all sales of food, beverages, and other products and merchandise sold and services rendered at or from the Premises or otherwise rendered in connection with your Noodles & Company Restaurant or your use of the Marks, including sales at or away from your Noodles & Company Restaurant, whether for cash or credit, and regardless of collection in the case of credit, but excluding: (1) all federal, state or municipal sales or service taxes collected from customers and paid to the appropriate taxing authority; and (2) all bona fide, documented (i) customer promotional discounts approved by us; (ii) refunds; (iii) voids, and (iv) employee meal discounts.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, Net Royalty Sales are used to calculate the royalty fee franchisees must pay. The Net Royalty Sales include the aggregate amount of all sales of food, beverages, other products, merchandise, and services rendered at or from the Noodles & Company restaurant. This includes sales at or away from the restaurant, whether the customer pays with cash or credit, and regardless of whether the franchisee has actually collected payment for credit sales.
However, the definition of Net Royalty Sales specifically excludes certain items. These exclusions include all federal, state, or municipal sales or service taxes collected from customers that the franchisee then pays to the appropriate taxing authority. Additionally, bona fide, documented customer promotional discounts approved by Noodles & Company, refunds, voids, and employee meal discounts are also excluded from the calculation of Net Royalty Sales.
For a prospective Noodles & Company franchisee, understanding this definition is crucial because the royalty fee is directly based on Net Royalty Sales. Accurately tracking and reporting sales, while also properly documenting exclusions like taxes, discounts, and refunds, is essential for calculating the correct royalty fee and avoiding potential discrepancies or disputes with Noodles & Company. Franchisees should pay close attention to the specific requirements for documenting exclusions to ensure compliance and accurate reporting.