How is the Royalty fee for a Noodles & Company franchise paid, and what triggers the payment?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of fee | Amount | Due Date | Remarks (1) |
|---|---|---|---|
| Royalty | 5% of Net Royalty Sales (2) (3) | Payable on 1st Monday immediately following each "Reporting Period" (2) | Payment is made by automatic electronic withdrawal. |
NOTES
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- The term "Net Royalty Sales" means the aggregate amount of all sales of food, beverages and other products and merchandise sold and services rendered at or from the restaurant location or otherwise rendered to or for your Noodles & Company restaurant or your use of the Marks, including sales at or away from your Noodles & Company restaurant, whether for cash or credit, and regardless of collection in the case of credit, but excluding: (1) all federal, state or municipal sales or service taxes collected from customers and paid to the appropriate taxing authority; and (2) all bona fide, documented: (a) customer promotional discounts approved by us; (b) refunds; (c) voids; and (d) employee meal discounts. A Reporting Period is defined as each one-week period commencing on Wednesday and ending on Tuesday, or other period as we may determine.
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- On occasion, we may consider reducing the royalty fee or offering a development incentive to fit a particular concern, taking into account a variety of factors, including, but not limited to, where a franchisee agrees to develop a significant number of Franchised Restaurants, a franchisee agrees to significantly accelerate historical development patterns, a franchisee agrees to develop Franchised Restaurants in a new territory, or a franchisee proposes to develop unique sites.
Source: Item 6 — OTHER FEES (FDD pages 19–22)
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, the royalty fee is 5% of Net Royalty Sales. This fee is payable on the first Monday immediately following each 'Reporting Period.' The Reporting Period is defined as each one-week period commencing on Wednesday and ending on Tuesday, or another period as Noodles & Company may determine. Payment is made by automatic electronic withdrawal. Net Royalty Sales includes all sales of food, beverages, other products, merchandise, and services at or from the restaurant, including sales at or away from the restaurant, whether for cash or credit.
However, Net Royalty Sales excludes certain items. These exclusions include all federal, state, or municipal sales or service taxes collected from customers and paid to the appropriate taxing authority. It also excludes bona fide, documented customer promotional discounts approved by Noodles & Company, refunds, voids, and employee meal discounts.
Noodles & Company also specifies circumstances where they might consider reducing the royalty fee or offering development incentives. These considerations are based on factors such as a franchisee's agreement to develop a significant number of franchised restaurants, accelerate development patterns, develop restaurants in a new territory, or propose unique sites. This indicates that the standard royalty fee may be negotiable under certain conditions, providing an opportunity for prospective franchisees to potentially lower their costs, especially if they plan for extensive or strategic development.