When purchasing an existing company-operated Noodles & Company restaurant, what are some costs a franchisee will likely incur?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
-
- If you are purchasing an existing company-operated restaurant, the estimated initial investment (excluding the purchase price) will be lower than the applicable estimated initial investment detailed above since there will be no costs associated with initial building and site improvement and equipment and signage. You will, however, likely incur costs for business licenses, utility deposits, insurance, and, depending on the condition of the restaurant and the equipment that you purchase, you may incur additional costs in connection with, among other things, repairs to the restaurant. These costs will vary by city and by restaurant.
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 23–27)
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, purchasing an existing company-operated restaurant can reduce initial investment costs by eliminating expenses tied to building and site improvements, equipment, and signage. However, franchisees should anticipate costs for business licenses, utility deposits, and insurance. Depending on the restaurant's condition, additional repair costs may also arise. These costs can vary based on the restaurant's location and condition.
Prospective Noodles & Company franchisees need to budget for permits and licenses, which the FDD states averaged $7,200 for recently opened company-owned restaurants, with a range from $900 to $22,600. These costs are paid to government agencies as incurred. Additionally, franchisees must factor in expenses for supplies and smallwares, estimated between $6,000 and $10,000, and opening inventory, also estimated between $6,000 and $10,000, both payable to approved suppliers as incurred. A safe and cash on hand in registers will cost between $1,000 and $3,000, paid in cash at opening to operations.
Furthermore, franchisees will incur utility costs, estimated between $1,000 and $18,000, payable to landlords as incurred. Pre-opening cash occupancy costs can reach up to $8,000, paid to landlords and approved suppliers. Training costs range from $21,000 to $64,000, covering expenses for employees, airlines, hotels, and restaurants. A grand opening marketing program requires a minimum spend of $15,000 for the first two restaurants in a market and $5,000 per restaurant thereafter, payable to approved suppliers. While legal expenses are listed as a potential cost, the FDD shows a range of $0-$0, indicating that these costs can vary significantly.
Finally, the FDD notes that additional funds for the first three months of operation could range up to $56,000, covering employee wages and benefits, marketing, insurance, maintenance, and other operating expenses. The franchise fee is $35,000, payable in cash to Noodles & Company as detailed in Item 5 of the Franchise Agreement. It is important to note that these estimates do not include finance charges, interest, or related costs if any portion of the initial investment is debt-financed. The FDD advises prospective franchisees to carefully review these figures with a business advisor before making any decision to purchase the franchise.