Is there a transfer fee required when transferring a Noodles & Company Area Development Agreement?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
| j. Assignment of contract by us | Section 11.04 | No restriction on our right to transfer or assign. |
|---|---|---|
| k. "Transfer" by you – defined | Section 1.04 | Includes the sale, assignment, |
| transfer, grant, testamentary or inter | ||
| vivos disposition, or any other | ||
| disposition of the agreement, any | ||
| rights under the agreement, or any | ||
| other ownership interest in you or | ||
| your Noodles & Company | ||
| restaurant; transfer, redemption or | ||
| issuance of any ownership interest | ||
| in your capital stock; any merger | ||
| between you or any other entity; any | ||
| transfer by operation of law (such as | ||
| in divorce or as a result of | ||
| insolvency or dissolution); any | ||
| transfer upon the death of your | ||
| principal owners and foreclosure or | ||
| other loss of possession, control or | ||
| management of your restaurant. | ||
| l. Our approval of transfer by | Section 7.01 | We have the right to approve all |
| you | transfers. |
| m. Conditions for our approval of transfer | Section 7.02 | You and your Owners and affiliates must be in compliance with Area Development Agreement; the proposed transferee must be an entity that is not publicly held and meets our qualifications and standards for approval; the proposed transferee must agree to be bound to our then current Area Development Agreement for the remainder of the Development Term; all rights to your not yet developed and/or operating Noodles & Company restaurants must be transferred; transfer fee must be paid; you must sign a general release and non-compete agreement; we must approve price and payment terms; we must waive our right of first refusal; any financing you provide to the proposed transferee must be subordinate to the transferee's obligations to pay amounts due to us; there must have been no change in the law since we entered into the Area Development Agreement that would limit our right as to the proposed transferee; the proposed transferee must obtain assignment of leases from all landlords; after the transfer, the proposed transferee must own the minimum number of restaurants that we require of Area Operators; and you must meet any other reasonable requirements we may impose to protect our rights. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 63–83)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, a transfer fee is required to transfer an Area Development Agreement. Specifically, the FDD states that to gain Noodles & Company's approval for a transfer, a transfer fee must be paid.
In addition to paying a transfer fee, the transferring party and their owners and affiliates must be in compliance with the Area Development Agreement. The proposed transferee must be an entity that is not publicly held and meets Noodles & Company's qualifications and standards for approval. The transferee must also agree to adhere to the current Area Development Agreement for the remainder of the development term.
Furthermore, all rights to the not-yet-developed or operating Noodles & Company restaurants must be transferred. The transferring party must sign a general release and non-compete agreement. Noodles & Company must approve the price and payment terms and waive their right of first refusal. Any financing provided by the transferring party to the proposed transferee must be subordinate to the transferee's obligations to pay amounts due to Noodles & Company. The proposed transferee must also obtain assignment of leases from all landlords and own the minimum number of restaurants that Noodles & Company requires of Area Operators. Finally, the transferring party must meet any other reasonable requirements imposed by Noodles & Company to protect their rights.