Does Noodles & Company have a right of first refusal to acquire my Development Rights?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
| m. Conditions for our approval of transfer | Section 7.02 | You and your Owners and affiliates must be in compliance with Area Development Agreement; the proposed transferee must be an entity that is not publicly held and meets our qualifications and standards for approval; the proposed transferee must agree to be bound to our then current Area Development Agreement for the remainder of the Development Term; all rights to your not yet developed and/or operating Noodles & Company restaurants must be transferred; transfer fee must be paid; you must sign a general release and non-compete agreement; we must approve price and payment terms; we must waive our right of first refusal; any financing you provide to the proposed transferee must be subordinate to the transferee's obligations to pay amounts due to us; there must have been no change in the law since we entered into the Area Development Agreement that would limit our right as to the proposed transferee; the proposed transferee must obtain assignment of leases from all landlords; after the transfer, the proposed transferee must own the minimum number of restaurants that we require of Area Operators; and you must meet any other reasonable requirements we may impose to protect our rights. |
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| n. Our right of first refusal to acquire your business | Section 7.06 | We have the right to purchase your Development Rights for the same price and on the same terms and conditions as any bona fide offer for your business. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 63–83)
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, Noodles & Company does have the right of first refusal to acquire a franchisee's Development Rights. Specifically, Noodles & Company has the right to purchase your Development Rights for the same price and on the same terms and conditions as any bona fide offer for your business. This applies to the Area Development Agreement.
This means that if a franchisee receives a legitimate offer to purchase their Development Rights, they must first offer Noodles & Company the opportunity to buy those rights under the same terms. The franchisee cannot simply accept the offer from the third party; they must give Noodles & Company the chance to match it.
This right of first refusal is a standard practice in franchising, allowing Noodles & Company to maintain control over its brand and expansion strategy. It ensures that the company has the option to acquire successful or strategically important territories, preventing them from falling into the hands of competitors or potentially unsuitable operators. It is important for a prospective franchisee to understand this clause, as it could impact their ability to sell their Development Rights to a third party.