What minimum requirements must a transferee meet to own Noodles & Company restaurants after a transfer?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
dual, partnership, limited liability company, corporation or other entity which directly or indirectly has or owns any interest in this Agreement, may Transfer the Franchise or any direct or indirect interest therein without our prior written consent, which may be withheld in our sole discretion. Any transfer without such approval or compliance constitutes a breach of this Agreement and is void and of no force or effect.
14.02 Conditions for Approval. If we have not exercised our right of first refusal under Section 14.06, we will not unreasonably withhold our approval of a Transfer of the Franchise that meets all of the reasonable restrictions, requirements and conditions we
impose on the Transfer, the transferors, and/or the transferee(s), prior to the transfer being valid, including the following:
(a) you have completed development of your Noodles & Company Restaurant and are operating your Noodles & Company Restaurant in accordance with this Agreement;
(b) you and your Owners and Affiliates must be in compliance with the provisions of this Agreement and all other agreements with us or our Affiliate, as applicable;
(c) the proposed transferee must be an entity, and its owners must provide us on a timely basis all information we request; the proposed transferee's owners must be individuals acting in their individual capacities who are of good character and reputation, who must have sufficient business experience, aptitude and financial resources to operate your Noodles & Company Restaurant, and who must otherwise meet our approval;
(d) the proposed transferee may not be an entity, or be affiliated with an entity, that is required to comply with reporting and information requirements of the Securities Exchange Act of 1934, as amended or other Publicly Held Entity;
(e) the transferee (or its Operating Partner) and its managers, shift supervisors and other personnel must have completed our initial training program or must be currently certified by us to operate and/or manage a Noodles & Company Restaurant to our satisfaction;
(f) the transferee (and its owners) must agree to be bound by all of the provisions of this Agreement for the remainder of its Term or, at our option, execute our then-current Franchise Agreement, IT Support Services Agreement and related documents used in the state in which your Noodles & Company Restaurant is located (which may provide for different royalties, advertising contributions and expenditures, duration and other rights and obligations than those provided in this Agreement);
(g) you or the transferee must pay us a transfer fee equal to $3,500 (or the amount in our then-current Franchise Agreement used for new franchises) plus associated costs;
(h) you and your Owners and Affiliates must, except to the extent limited or prohibited by applicable law, execute a general release, in form and substance satisfactory to us, of any and all claims against us, our Affiliate, stockholders, officers, directors, employees, agents, successors and assigns;
(i) we must not have disapproved the material terms and conditions of such Transfer (including the price and terms of payment and the amount to be financed by the transferee in connection with such transfer) on the basis that they are so burdensome as to be likely, in our reasonable judgment, to adversely affect the transferee's operation of your Noodles & Company Restaurant or its compliance with its franchise agreements and any other agreements being transferred;
(j) if you (or any of your Owners or Affiliates) finance any part of the sale price of the transferred interest, you and/or your Owners or Affiliate must agree that all obligations of the transferee, and security interests reserved by any of them in the assets transferred, will be subordinate to the transferee's obligations to pay all amounts due us and our Affiliate and to otherwise comply with this Agreement, any Franchise Agreement being transferred or any Franchise Agreement executed by the transferee;
(k) you and your Owners must execute a non-competition covenant, in form and substance satisfactory to us, in favor of us and the transferee agreeing that, for a period of two years, starting on the effective date of the Transfer, you and your Owners will not directly or indirectly (such as through members of his/her or Immediate Families) own any legal or beneficial interest in, or render services or give advice to: (1) any Competitive Business;
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, a proposed transferee must meet several requirements to be approved. The transferee must be an entity, and its owners must provide all requested information promptly. These owners must be individuals of good character and reputation, possessing sufficient business experience, aptitude, and financial resources to operate the Noodles & Company Restaurant. The transferee cannot be a Publicly Held Entity or affiliated with one.
Furthermore, the transferee (or its Operating Partner) and its managers, shift supervisors, and other personnel must complete Noodles & Company's initial training program or be currently certified to operate and/or manage a Noodles & Company Restaurant to the company's satisfaction. The transferee (and its owners) must agree to be bound by all provisions of the current Franchise Agreement for the remainder of its term or, at Noodles & Company's option, execute the then-current Franchise Agreement, IT Support Services Agreement, and related documents used in the state where the restaurant is located. The transferee must also obtain an assignment of leases from the landlords for all Restaurants being transferred and obtain liquor and other required licenses from all applicable authorities for all Restaurants being transferred.
The transferee must pay a transfer fee of $3,500 (or the amount in the then-current Franchise Agreement used for new franchises) plus associated costs. The transferee must also meet all of the then-current Franchise Agreement requirements, approval processes, and criteria for new Area Operators, including owning the required minimum number of Noodles & Company Restaurants after the transfer. The transfer is contingent on Noodles & Company determining that no federal or state statute, regulation, rule, or law enacted after the agreement date may have a material adverse effect on their relationship with the proposed transferee.
Finally, the transferee must obtain an acceptable assignment of Lease(s) from each landlord for each Noodles & Company restaurant contemplated by the agreement and as to each restaurant which is proposed to be transferred. These conditions ensure that any new owner is well-prepared and financially stable, protecting the Noodles & Company brand and the interests of other franchisees.