Does the non-competition covenant for a transferred Noodles & Company franchise extend to immediate family members?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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; or (2) any entity which grants franchises, licenses or other interests to others to operate any Competitive Business in any Designated Market Area (as defined by Nielsen Media Research) where a Noodles & Company Restaurant is located, whether Company-owned or franchised, or within any area that is or was within an Area Development Area or a Protected Area, as those terms are defined in the Area Development Agreement and this Agreement;
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, the non-competition covenant extends to immediate family members of the franchisee and their owners. Specifically, when a Noodles & Company franchise is transferred, the selling franchisee and their owners must sign a non-competition agreement.
This agreement prevents them, directly or indirectly (including through immediate family members), from owning any interest in or providing services to a competitive business. This restriction applies for two years, starting from the transfer date. The non-compete extends to any Competitive Business or any entity that grants franchises, licenses, or other interests to others to operate any Competitive Business in any Designated Market Area where a Noodles & Company Restaurant is located.
This clause is designed to protect Noodles & Company and the new franchisee from competition from the previous owner who has knowledge of the business operations. The inclusion of immediate family members ensures that the non-compete cannot be circumvented by simply having a close relative operate a competing business. Prospective franchisees should carefully consider the implications of this extended non-competition clause, especially if family members are involved in or may consider entering a similar business.