Under the Noodles & Company IT Agreement, what dollar amount of unsatisfied judgment against the franchisee constitutes a noncurable default?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section In IT Agreement | Summary | |
|---|---|---|---|
| a. Length of term | Section 1 | Co-terminous with your Franchise Agreements | |
| b. Renewal or extension | Not applicable | ||
| c. Requirements for you to | Not applicable | ||
| review or extend | |||
| d. Termination by you | Section 12.2 | You have the right to terminate on 30 days’ notice in the event of our material breach. You have the right to terminate for any reason on 90 days’ notice, effective at the end of the then current contract year. | |
| m. Conditions for our | Not applicable | ||
| approval of transfer | |||
| n. Our right of first refusal | Not applicable | ||
| o. Our option to purchase | Not applicable | ||
| your business | |||
| p. Death or disability | Not applicable | ||
| q. r. Non-competition | Not applicable | ||
| covenants | |||
| s. Modification | Section 13.4 | No modification unless agreed in writing by both parties. | |
| t. Integration/merger clause | Sections 13.4, 13.9 | Agreement is complete and final statement of terms. | |
| u. Dispute resolution | Section 13.7 | Disputes to be resolved in accordance with dispute resolution provisions of then current form of Franchise Agreement. | |
| v. Choice of forum | Section 13.7 | Disputes to be resolved in accordance with dispute resolution provisions of then current form of Franchise Agreement. | |
| w. Choice of law | Section 13.7 | Follows choice of law provisions of then current form of Franchise Agreement. | h. "Cause" defined – noncurable defaults Sections 15.02, 15.03 and 15.07 Adjudicated bankrupt or insolvent; admission of inability to meet your financial obligations when due; disposition made for the benefit of creditors; judgment entered against you for $25,000 or more remains unsatisfied for more than 30 days; seizure or foreclosure of the restaurant or your assets accompanied by an final judgment unsatisfied for more than 30 days; execution levied against your business or property and not discharged within 5 days; consent to entry of an order in an involuntary proceeding or conversion of an involuntary proceeding to a voluntary proceeding; consent to appointment of or possession by a receiver; recordation of a mechanics lien against the restaurant or any equipment that is not released within 60 days; condemnation; failure to open or abandonment; unauthorized transfer; misrepresentations; underreporting of sales or other financial information; conviction of a felony or other criminal offense that may adversely affect the System or our goodwill; unauthorized use or disclosure of confidential information; unethical conduct; failure to cure (if applicable) any default under any other agreement with us o |
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, a judgment of $25,000 or more against the franchisee that remains unsatisfied for more than 30 days constitutes a noncurable default. This is considered 'cause' for termination of the franchise agreement.
This means that if a court enters a final judgment against a Noodles & Company franchisee for $25,000 or more, and the franchisee does not satisfy (pay) that judgment within 30 days, Noodles & Company has grounds to terminate the franchise agreement. This clause protects Noodles & Company from franchisees who are unable to meet their financial obligations and could potentially harm the brand's reputation.
It is important to note that this is a noncurable default, meaning the franchisee does not have an opportunity to fix the issue and prevent termination. The FDD also lists other events that constitute noncurable defaults, such as bankruptcy, unauthorized transfer of the franchise, and conviction of a felony. Prospective franchisees should carefully review all of these provisions to understand the circumstances under which their franchise agreement could be terminated without an opportunity to cure the default.