How much did Noodles & Company pay to the State of Delaware to settle the litigation?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
ITEM 3 LITIGATION
The State of Delaware, William French v. Card Compliant, LLC, et. al., Case No. N13C-06-289 FSS (Del. Super. Ct., New Castle County)
Noodles & Company was named as one of the defendants in an action initially filed under seal on June 28, 2013 and unsealed on March 24, 2014. The complaint alleged that defendants knowingly violated the Delaware Abandoned Property Law by failing to report and deliver "unclaimed gift card funds" to the State of Delaware, and knowingly made, used or caused to be made or used, false statements and records to conceal, avoid or decrease an obligation to pay or transmit money to Delaware in violation of the Delaware False Claims and Reporting Act. The complaint sought an order that defendants cease and desist from violating the Delaware False Claims and Reporting Act, unspecified monetary damages (including treble damages under the False Claims and Reporting Act), penalties, and attorneys' fees and costs.
This litigation was settled in August 2018. In the settlement, Noodles & Company paid $450,000 to the State of Delaware and $150,000 to William French, the relator in the action; the action was dismissed, and the parties exchanged mutual releases. Noodles & Company did not admit liability or wrongdoing in the settlement.
Other than this action, no
Source: Item 3 — LITIGATION (FDD page 16)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, Noodles & Company was involved in litigation with the State of Delaware regarding unclaimed gift card funds. The litigation was settled in August 2018. As part of the settlement, Noodles & Company paid $450,000 to the State of Delaware. Additionally, Noodles & Company paid $150,000 to William French, the relator in the action. Noodles & Company did not admit any liability or wrongdoing in the settlement. The action was subsequently dismissed, and both parties exchanged mutual releases.
This type of disclosure is standard in franchise agreements, as it informs potential franchisees about any legal issues that could affect the company's financial stability or reputation. For a prospective franchisee, this information provides transparency regarding Noodles & Company's past legal challenges and how they were resolved. It's important to note that the settlement did not involve an admission of liability from Noodles & Company.
While this specific litigation is now resolved, prospective franchisees should consider the potential for future legal challenges and how Noodles & Company manages and resolves such issues. Understanding the company's approach to legal matters can help franchisees assess the risks associated with investing in the franchise. Reviewing Item 3 in detail gives potential franchisees insight into the types of legal issues Noodles & Company has faced and how they were handled.