Under what circumstances must a Noodles & Company franchisee immediately advise the franchisor of a crisis?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
7.06 Noodles & Company's Right of First Refusal. If you or any of your Owners desires to Transfer the Development Rights for legal consideration, you or such Owner(s) must obtain a bona fide, executed written offer from a responsible and fully disclosed purchaser and must deliver immediately to us a complete and accurate copy of such offer. If the offeror proposes to buy any other property or rights from you or any of your Owners or Affiliates (other than rights under Area Development and Franchise Agreements for Noodles & Company restaurants) as part of the bona fide offer, the proposal for such property or rights must be set forth in a separate, contemporaneous offer that is fully disclosed to us, and the price and terms of purchase offered to you or your Owners for the transfer of the Development Rights must reflect the bona fide price offered therefore and not reflect any value for any other property or rights.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
Based on the 2025 Noodles & Company Franchise Disclosure Document, there are specific instances related to transferring development rights where a franchisee must immediately inform Noodles & Company. Specifically, if a franchisee or any of their owners desires to transfer the development rights for legal consideration, they must obtain a bona fide, executed written offer from a responsible and fully disclosed purchaser. Following this, the franchisee must immediately deliver a complete and accurate copy of the offer to Noodles & Company.
This immediate notification is crucial because Noodles & Company retains the right of first refusal. This means they have the option to purchase the development rights themselves, matching the terms of the offer presented by the third-party purchaser. The franchisor has 60 days from the date they receive the offer to exercise this option.
The FDD also specifies that if the offer includes the purchase of other property or rights, these must be outlined in a separate, contemporaneous offer to ensure transparency. The price and terms for the development rights must accurately reflect their bona fide value, independent of any other property or rights included in the offer. This level of detail ensures that Noodles & Company can make an informed decision based on the true value of the development rights.
For a prospective Noodles & Company franchisee, this clause highlights the importance of transparency and adherence to the franchisor's procedures when considering a transfer of development rights. Failing to immediately provide the offer or attempting to obscure the terms could jeopardize the transfer and potentially lead to legal complications. It also demonstrates the franchisor's vested interest in maintaining control over who joins their franchise system.