What is included in the franchise receivables for Noodles & Company?

Based on the 2025 Noodles & Company Franchise Disclosure Document, the document does not specifically define or detail what is included in "franchise receivables." However, it does discuss revenue recognition related to franchise fees and royalties. Initial franchise fees are recognized as revenue over the term of the franchise agreement, typically 20 years. For example, Noodles & Company recognized revenue of $0.3 million, $0.2 million, and $0.1 million in 2024, 2023, and 2022, respectively, related to initial fees from franchisees. The company anticipates recognizing approximately $0.1 million each fiscal year through 2029 and about $0.6 million thereafter concerning performance obligations that remain unfulfilled as of December 31, 2024.

Additionally, the FDD mentions that revenue consists of sales from restaurant operations, franchise royalties, and fees. Revenue from company-owned restaurants is recognized when sales occur, reported net of sales and use taxes. Franchisees also pay royalties, typically a percentage of gross sales, as part of their agreement. These royalties, along with initial and renewal fees, contribute to the franchisor's revenue stream.

Since the FDD does not explicitly define "franchise receivables," it is important for a prospective franchisee to ask Noodles & Company for a detailed breakdown of what this entails. Understanding the components of franchise receivables will provide clarity on the franchisor's accounting practices and financial reporting, and how franchisee payments are categorized and managed. This information is crucial for assessing the financial health and stability of the franchise system.