Does Noodles & Company have sole discretion in approving transfers?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
14.01 Noodles & Company's Approval. The rights and duties created by this Agreement are personal to you and your Owners. Accordingly, neither you nor any of your Owners or Affiliates, nor any individual, partnership, limited liability company, corporation or other entity which directly or indirectly has or owns any interest in this Agreement, may Transfer the Franchise or any direct or indirect interest therein without our prior written consent, which may be withheld in our sole discretion. Any transfer without such approval or compliance constitutes a breach of this Agreement and is void and of no force or effect.
14.02 Conditions for Approval. If we have not exercised our right of first refusal under Section 14.06, we will not unreasonably withhold our approval of a Transfer of the Franchise that meets all of the reasonable restrictions, requirements and conditions we
impose on the Transfer, the transferors, and/or the transferee(s), prior to the transfer being valid, including the following:
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, the franchisor retains sole discretion in approving franchise transfers. Specifically, Item 14.01 states that neither the franchisee nor their owners can transfer the franchise or any interest in it without Noodles & Company's prior written consent, which "may be withheld in our sole discretion." This clause grants Noodles & Company broad authority over who can become a franchisee.
However, this discretion is somewhat tempered by the conditions outlined in Section 14.02. If Noodles & Company doesn't exercise its right of first refusal, it agrees not to "unreasonably withhold" approval of a transfer, provided the transfer meets all the restrictions, requirements, and conditions imposed by Noodles & Company. These conditions cover various aspects of the transfer, the transferors, and the transferees.
For prospective Noodles & Company franchisees, this means that while they have the right to transfer their franchise, the franchisor has significant control over the process. It is crucial to understand the conditions for approval and ensure any potential transferee meets these requirements to avoid delays or denial of the transfer. The FDD outlines several of these conditions, including compliance with existing agreements, the transferee's legal structure and qualifications, and adherence to non-competition covenants. Franchisees should carefully review these conditions and seek legal counsel to navigate the transfer process effectively.