Does Noodles & Company require franchisees to obtain consent before issuing or selling securities?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
us, that the execution, delivery and performance of this Agreement and all other agreements and ancillary documents contemplated hereby or thereby have been duly authorized by all necessary action by your corporation, partnership, limited liability company or other legal entity, as applicable. You may not change the form of your entity unless we mutually agree in writing that such a change is warranted. Neither you, your partners, shareholders, members of an LLC nor the entity formed to operate your Noodles & Company Restaurants may be, or become, during the term of this Agreement and any other agreements between us, including the Franchise Agreement, a Publicly Held Entity.
8.02 Disclosure of Ownership Interests. You and each of your Principal Owners represents, warrants and agrees that Exhibit A is current, complete and accurate and shall not be changed without our prior written consent. You agree that updated Exhibit A will be furnished promptly to us, so that Exhibit A (as so revised and signed by you) is at all times current, complete and accurate and shall not be changed without our prior written consent. Failure to promptly provide such revised Exhibit A, and to obtain our prior written consent prior to such changes, is a material breach of this Agreement. Each person who is or becomes a Principal Owner must execute an agreement in the form we prescribe, undertaking to be bound jointly and severally by the terms of this Agreement, the current form of which is attached hereto as Exhibit B. Each person who is or becomes an Owner or an Operating Partner must execute an agreement in the form we prescribe, undertaking to be bound by the confidentiality and non-competition covenants contained in the Agreement, the current form of which is attached hereto as Exhibit D.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, franchisees must obtain prior written consent from Noodles & Company before changing the ownership interests outlined in Exhibit A. Franchisees must also promptly furnish updated Exhibit A to Noodles & Company, ensuring it remains current, complete, and accurate. Failure to provide the revised Exhibit A or obtain prior written consent for changes constitutes a material breach of the agreement.
Furthermore, the initial owners who execute the agreement must continue to own and have voting authority of at least 51% of the ownership and voting rights under the agreement. This requirement ensures that the original controlling parties maintain a significant stake in the franchise's operation and decision-making processes.
Noodles & Company also stipulates that neither the franchisee, nor their partners, shareholders, or members of an LLC, may become a Publicly Held Entity during the term of the Franchise Agreement. This restriction likely aims to maintain tighter control over the franchise's operations and prevent the complexities associated with publicly traded entities. These stipulations are typical in franchising to ensure brand consistency and protect the franchisor's interests.