Under what circumstances will Noodles & Company be liable to a franchisee for exercising its discretion?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
grants us the discretion to make decisions, take actions, and/or refrain from taking actions not inconsistent with your explicit rights and obligations hereunder that may affect favorably or adversely your interests; (b) we will use our judgment in exercising such discretion based on our assessment of our own interests and balancing those interests against the interests of the owners of Noodles & Company restaurants generally (including ourselves, and our Affiliates and other Area Operators), and specifically without considering your individual interests or the interests of any other particular Area Operator; (c) we will have no liability to you for the exercise of our discretion in this manner so long as such discretion is not exercised in bad faith toward you; and (d) in the absence of such bad faith, no trier of fact in any legal action or arbitration proceeding shall substitute its judgment for our judgment so exercised.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, Noodles & Company has the discretion to make decisions and take actions that may affect a franchisee's interests, without considering the individual interests of any particular franchisee. However, Noodles & Company will be liable to a franchisee if such discretion is exercised in bad faith toward the franchisee.
In exercising its discretion, Noodles & Company will use its judgment based on its own interests and balancing those interests against the interests of the owners of Noodles & Company Restaurants generally, including themselves, their affiliates, and other area operators. The FDD clarifies that a court should not second-guess Noodles & Company's judgment in the absence of bad faith.
This clause emphasizes the importance of a good working relationship between Noodles & Company and its franchisees. While Noodles & Company retains significant decision-making power, it is expected to act in good faith. A prospective franchisee should carefully consider this clause and seek legal advice to fully understand its implications.