What royalty rate will be specified in the Franchise Agreement for each Noodles & Company restaurant?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
6.02 Royalty Fees. You agree to pay us a continuing royalty fee in the amount of 5.0% of Net Royalty Sales (the "Royalty Fee") for each Reporting Period. A Reporting Period shall be defined as each one week period commencing on Wednesday and ending on Tuesday, or such other period as we shall determine from time to time. A Sweep Period shall be the period of time for which a Sweep of Area Operator's account has been made by Noodles & Company to obtain the Royalty Fee for Net Royalty Sales that have occurred, but for which a prior Sweep was not made.
6.03 Continuing Royalty Upon Default. Should this Agreement terminate due to a material breach or default by you, or should you fail to continuously operate your Noodles & Company Restaurant without our prior written approval to cease continuous operations, you shall pay to us for each Reporting Period remaining in the entire initial term of the Agreement a continuing royalty in an amount equal to the total Royalty Fees due from you for the preceding fifty-two (52) Reporting Periods divided by fifty-two (52). If your Noodles & Company Restaurant was open fewer than fifty-two (52) Reporting Periods, then the average of all Reporting Periods for which you were open shall be used.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, a franchisee must pay a continuing royalty fee. This royalty fee is 5.0% of Net Royalty Sales for each Reporting Period.
The Reporting Period is defined as each one-week period, commencing on Wednesday and ending on Tuesday, or another period that Noodles & Company determines from time to time. Noodles & Company can perform a "Sweep" of the Area Operator's account to obtain the Royalty Fee for Net Royalty Sales that have occurred but for which a prior Sweep was not made.
In the event of a material breach or default by the franchisee leading to termination of the Franchise Agreement, or if the franchisee fails to continuously operate their Noodles & Company restaurant without prior written approval, the franchisee is obligated to pay a continuing royalty for each Reporting Period remaining in the initial term of the agreement. This continuing royalty is equivalent to the total Royalty Fees due for the preceding fifty-two (52) Reporting Periods divided by fifty-two (52). If the restaurant was open for fewer than fifty-two (52) Reporting Periods, the average of all Reporting Periods for which the restaurant was open will be used to calculate the fee.