What is the relationship between the initial investment for a Noodles & Company franchise (Item 7) and the franchisee's obligations for site selection and acquisition/lease (Item 9)?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
the manner in which those fees are paid is provided in Item 5.
-
- You must lease or purchase a location approved by Noodles & Company and construct, remodel, alter and improve it to Noodles & Company's specifications. Lease and purchase costs are not included in the figures in the Item 7 table except as discussed in Note 8 and listed in Pre-Opening Cash Occupancy Costs. These estimates assume that the location will be a leased, unimproved, unfinished retail store-type unit. If you purchase a location, lease a free-standing building or lease a space in a multi-story structure, your initial investment may be much greater. A typical Noodles & Company restaurant will be located in a suburban or urban area on a major thoroughfare or adjacent to or part of a retail shopping center. For the restaurants included in the above table, occupancy costs which are comprised of base rent, percentage rent, CAM and real estate taxes (determined in accordance with generally accepted accounting principles) averaged $9,600 per month and ranged from approximately $6,900 to $13,600 per month. You must perform or have performed any construction, remodeling or additions necessary to cause the premises to conform to applicable federal, state, county and city laws, ordinances, codes and rules and regulations governing food services businesses, and that meet Noodles & Company's requirements for the layout, design, construction, fixtures, equipment, installation and trade dress appearance of a Noodles & Company location.
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, the initial investment outlined in Item 7 is directly related to the franchisee's responsibilities for site selection and acquisition/lease. The FDD specifies that franchisees must secure a location approved by Noodles & Company, either through leasing or purchasing, and then develop the site to meet the company's standards. The costs associated with leasing or purchasing the site are generally not included in the initial investment figures presented in Item 7, with the exception of pre-opening cash occupancy costs. These costs can vary significantly based on factors such as market conditions, location characteristics, and lease terms.
The FDD emphasizes that the initial investment estimates assume a leased, unimproved retail space. If a franchisee chooses to purchase a location or lease a free-standing building, the initial investment could be substantially higher. The document also notes that occupancy costs for recently opened company-owned restaurants averaged $9,600 per month, with a range from approximately $6,900 to $13,600 per month, including base rent, percentage rent, CAM, and real estate taxes. Franchisees are responsible for ensuring the site complies with all applicable laws and regulations and meets Noodles & Company's requirements for layout, design, and appearance.
Noodles & Company provides guidance and criteria for site selection, but the final decision to lease or purchase a site rests solely with the franchisee. The company's approval of a site does not guarantee its suitability or financial success. Franchisees must submit a complete Site Package for approval, and Noodles & Company will review the package based on factors like location, demographics, traffic patterns, and site economics. The franchisor aims to make a decision within 45 days of receiving a complete package. Ultimately, franchisees bear the responsibility for conducting thorough due diligence and understanding the costs associated with site selection and development, as these costs can significantly impact the overall initial investment.