What is the obligation of Noodles & Company franchisees regarding proceeds from gift card sales?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
In March 2020, our wholly-owned subsidiary, The Noodle Shop Co. – Virginia, Inc., a Virginia corporation ("Noodles Virginia"), acquired in a merger the assets and liabilities of the third party gift card service provider previously used by us. Its principal place of business is 520 Zang Street, Suite D, Broomfield, CO 80021. Noodles Virginia issues the gift cards, bears the liabilities for the cards and manages and operates the gift card program for Noodles & Company and its franchisees. Pursuant to our gift card program, each franchisee will provide proceeds from sales of gift cards to Noodles Virginia and will be credited by Noodles Virginia with the face amount of gift cards redeemed at restaurants operated by the franchisee. Noodles Virginia has never operated a Noodles & Company restaurant or offered franchises in any line of business.
Source: Item 1 — The Franchisor and any Parents, Predecessors, and Affiliates (FDD pages 10–12)
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, franchisees are required to participate in the company's gift card program. Specifically, franchisees must provide proceeds from the sales of gift cards to Noodles Virginia, a wholly-owned subsidiary of Noodles & Company that manages the gift card program. In return, Noodles Virginia will credit the franchisee with the face amount of gift cards that are redeemed at their restaurant locations.
This arrangement means that while Noodles & Company franchisees handle the initial sale of gift cards, the financial responsibility and management of the gift card program are centralized through Noodles Virginia. This structure likely allows Noodles & Company to maintain better control over the gift card liability and streamline the redemption process across all franchise locations.
For a prospective franchisee, this system simplifies gift card management. They collect revenue from gift card sales and then forward those proceeds to Noodles Virginia. When a customer uses a gift card at their location, the franchisee receives a credit for the card's value, ensuring they are reimbursed for the transaction. This process reduces the administrative burden on individual franchisees and ensures a consistent gift card experience for customers across all Noodles & Company locations.