What sales are excluded from the calculation of "Net Royalty Sales" for a Noodles & Company franchise?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 6 — OTHER FEES (FDD pages 19–22)
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, the calculation of "Net Royalty Sales" excludes specific items. Net Royalty Sales is defined as the total 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, the following are excluded from the calculation of Net Royalty Sales: (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 Noodles & Company; (b) refunds; (c) voids; and (d) employee meal discounts.
This definition is important because several fees, including the royalty fee (5% of Net Royalty Sales), the Advertising Brand Development Fund (ABDF), Field Marketing Funds (FMF), and the Marketing Administration Fee (MAF) are calculated as a percentage of Net Royalty Sales. Therefore, accurately calculating Net Royalty Sales, with the specified exclusions, directly impacts the amount a franchisee will pay in these ongoing fees to Noodles & Company.