What is a 'Sweep' as it pertains to Noodles & Company franchise agreements?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
6.04 Designated Account. Prior to the opening of your Noodles & Company Restaurant, and as a condition thereof, you shall establish a designated bank account from which we shall be authorized to withdraw in any manner which we prescribe, which
may include account transfer or wire transfer, any amounts due to us or our Affiliate from you under this Agreement, including Royalty Fees and Marketing Funds, as hereinafter defined (such withdrawals shall be defined as a Sweep). We shall have the authority to Sweep the account at anytime; however, we agree not to Sweep the account more frequently than once each week so long as Area Operator is not in default of this Agreement or any other Agreement between Area Operator and Noodles & Company. We have the right to review your sales numbers on a daily basis. As early as the first business day, or any day we choose thereafter, following a Reporting Period, we shall calculate the Royalty Fee due for that Reporting Period and Sweep such amount and any other amounts due under this Agreement, including any advertising and marketing fees set forth under Section 10, directly from the designated account.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, a 'Sweep' refers to the process by which Noodles & Company withdraws funds from a franchisee's designated bank account to cover amounts due to them or their affiliates. This includes Royalty Fees and Marketing Funds. Prior to opening their Noodles & Company restaurant, franchisees must establish a designated bank account that Noodles & Company is authorized to withdraw from.
Noodles & Company has the authority to perform a Sweep at any time. However, they agree not to Sweep the account more than once each week, provided the Area Operator (franchisee) is not in default of the Franchise Agreement or any other agreement between them and Noodles & Company. Noodles & Company also retains the right to review a franchisee's sales numbers on a daily basis.
Following each Reporting Period (defined as each one week period commencing on Wednesday and ending on Tuesday), Noodles & Company will calculate the Royalty Fee due and Sweep that amount, along with any other amounts due under the agreement, directly from the designated account. The Sweep can occur as early as the first business day following a Reporting Period, or any day thereafter that Noodles & Company chooses. The 'Sweep Period' is defined as 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. All costs associated with establishing and maintaining this account are the responsibility of the franchisee.