After termination or expiration of a Noodles & Company franchise, what is the geographic scope of the non-competition covenant?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
-----------------------------------------------------------------------------------------------------------------------------------| | r. Non-competition covenants after the franchise is terminated or expires | Section 7.03 | For 2 years after termination or expiration and except for a 5.0% or less ownership interest in a publicly traded company, you may not own, or have any legal or beneficial interest in, or render services or give advice to, any competitive business, as described above in q. in any Designated Market Area (as defined by Nielsen Media Research) where any Noodles & Company restaurant is located. Noodles & Company may, in its discretion, exclude from this clause certain competitive businesses approved by Noodles & Company at the time of execution of your Area Development Agreement and Franchise Agreements or approved subsequent to the execution of those agreements. |
| s. Modification of the agreement | Sections 10.01 and 20.05 | Generally, no modification except by written agreement signed by both parties. However, the Noodles & Company Operations Manual and the System are subject to change by us. We can increase the total aggregate amount of advertising and marketing fund we can require you to pay (currently a maximum of 5.5% of Net Royalty Sales) if 66.0% of the then existing Noodles & Company restaurants vote to approve such an increase. |
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Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 63–83)
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, after the termination or expiration of the franchise agreement, a franchisee is subject to a non-competition covenant for a period of 2 years. This prevents the franchisee from engaging in any competitive business within a specific geographic area.
The geographic scope of this non-competition covenant extends to any Designated Market Area (as defined by Nielsen Media Research) where a Noodles & Company restaurant is located. This means that if a former franchisee wishes to operate or be involved with a competitive business, they cannot do so within any market area where Noodles & Company has an existing restaurant. The definition of a competitive business includes restaurants whose sales of specific dishes (noodle, pasta, Asian, Italian, or Mediterranean dishes) constitute more than 10% of their revenue, those that are substantially similar to the Noodles & Company concept, or those operating in a fast-casual or quick-casual format.
Noodles & Company retains the discretion to exclude certain competitive businesses from this non-competition clause. These exclusions can be approved either at the time the Area Development Agreement and Franchise Agreements are executed or at a later date. This provides some flexibility, potentially allowing a former franchisee to engage with a business that might otherwise be considered competitive, subject to Noodles & Company's approval. However, the franchisee can hold a 5.0% or less ownership interest in a publicly traded company.