Under what circumstances does the Noodles & Company Franchise Agreement require persons with legal or beneficial ownership interests in the Franchisee to be personally bound by the confidentiality and non-competition covenants?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
The Franchise Agreement requires persons with legal or beneficial ownership interests in Franchisee under certain circumstances to be personally bound by the confidentiality and non-competition covenants contained in the Franchise Agreement. You are entering into this Agreement to induce Noodles & Company to enter into the Franchise Agreement.
Each person who is or becomes an Owner or an Operating Partner must execute an agreement in the form we prescribe, undertaking to be bound by the confidentiality and non-competition covenants contained in the Agreement, the current form of which is attached hereto as Exhibit D.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, individuals with legal or beneficial ownership in a Noodles & Company franchise are required to be personally bound by confidentiality and non-competition agreements under certain circumstances. Specifically, all Owners and Operating Partners must execute and comply with a confidentiality and non-compete agreement. This agreement ensures they are bound by the confidentiality and non-competition covenants within the Franchise Agreement. These individuals must sign an agreement in a form prescribed by Noodles & Company, as detailed in Exhibit D of the franchise agreement.
This requirement is in place to protect Noodles & Company's confidential information and prevent unfair competition. Owners and Operating Partners may gain access to proprietary information and trade secrets, making it crucial to maintain confidentiality. The agreement stipulates that these individuals cannot use confidential information in any other business, must maintain confidentiality, and are prohibited from making unauthorized copies or distributing any confidential information.
The non-competition aspect of the agreement restricts owners from engaging in any competitive business during the term of the Franchise Agreement and within specific geographic areas. These areas include the Protected Area, a 15-mile radius around the franchisee's Noodles & Company Restaurant, a 15-mile radius of any Noodles & Company Restaurant, or anywhere in the United States. This ensures that owners do not leverage their knowledge and resources gained from the Noodles & Company franchise to compete against the brand.
Prospective franchisees should carefully review Exhibit D and related sections of the Franchise Agreement to fully understand the scope and implications of these confidentiality and non-competition covenants. It is also important to note that these obligations extend indefinitely even after the individual ceases to have an interest in the Noodles & Company franchise, requiring them to return all confidential information to Noodles & Company.