Under what circumstances will Noodles & Company not permit a transfer of the Area Development Agreement?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
ty rights in such ideas, concepts, techniques, or materials.
6.09 Confidentiality and Non-Compete Agreements. You agree to cause each of your Owners and Operating Partners and any other management personnel primarily involved in Noodles & Company, to the extent permitted by applicable law, to enter into and comply with the confidentiality and non-compete agreement referred to in Section 4.02 hereof. Notwithstanding the foregoing, under no circumstances will Noodles & Company control the forms of employment agreements you use with your employees or otherwise be responsible for your labor relations or employment practices.
7. AREA OPERATOR'S RIGHT TO TRANSFER.
7.01 Franchisor's Approval. Your rights and duties under this Agreement are personal to you and your Principal Owners. Accordingly, neither you nor any of your Owners may Transfer the Development Rights or any direct or indirect interest therein without our prior written consent, which may be withheld in our sole discretion. If we are required by applicable law to permit a transfer, the criteria in Section 7.02 must be met and you must obtain our approval. Any such transfer without such approval or compliance constitutes a breach of this Agreement and is void and of no force or effect. You may not, under any circumstances, directly or indirectly, subfranchise or sublicense any of your rights hereunder. If applicable law does not require us to permit a transfer, no transfer shall be permitted and Section 7.02 will not apply.
7.02 Conditions for Approval. If we have not exercised our right of first refusal under Section 7.06, and we are required by law to permit a transfer of this Agreement, we will not unreasonably withhold our approval of a Transfer of the Development Rights that meets all of the restrictions, requirements and conditions we impose on the transfer, the transferor(s) and the transferee(s), including without limitation the following:
(a) you and your Owners and Affiliates must be in compliance with the provisions of this Agreement, all Franchise Agreements executed pursuant hereto and all other agreements with us or our Affiliate, if applicable;
(b) the proposed transferee must be a corporation, partnership, limited liability company or other legal entity; transferee and its owners must provide us on a timely basis all information we request, and the owners must be individuals acting in their individual capacities who are of good character and reputation, who must have sufficient business experience, aptitude and financial resources to develop Noodles & Company restaurants pursuant to this Agreement, and who must otherwise meet our then current standards for approval;
(c) the proposed transferee may not be, or become, an entity, or be, or become, affiliated with an entity, that is a Publicly Held Entity;
(d) the transferee and its owners must agree to be bound by all of the provisions of our then current Area Development Agreement for the remainder of the Term;
(e) the transferee must acquire, in a concurrent transaction, all of your rights and the rights of your Owners and Affiliates under all agreements between you or your Affiliates and us or our Affiliate, regarding all restaurants contemplated by this agreement not yet developed and/or operating;
(f) you or the transferee must pay us a transfer fee in an amount equal to $7,500, plus $3,500 for each Noodles & Company restaurant for which a Franchise Agreement has been executed, or is contemplated by the terms of this Agreement, plus any transfer fee required by any other agreement between you or your Affiliates and us or our Affiliates and all costs associated with such transfer;
(g) you and your Owners and Affiliates must, except to the extent limited or prohibited by applicable law, execute a general release, in form and substance satisfactory to us, of any and all claims against us, our Affiliates and stockholders, officers, directors, employees, agents, successors, and assigns;
(h) we must not have disapproved the material terms and conditions of such transfer on the basis that they are so burdensome as to be likely, in our reasonable judgment, to adversely affect the transferee's operation of Noodles & Company restaurants or its compliance with its franchise agreements, any area development agreements and any other agreements being transferred;
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, your rights and duties under the Area Development Agreement are personal to you and your Principal Owners. Therefore, neither you nor any of your Owners may Transfer the Development Rights or any direct or indirect interest therein without Noodles & Company's prior written consent, which may be withheld in their sole discretion. If applicable law does not require Noodles & Company to permit a transfer, no transfer shall be permitted.
However, if Noodles & Company is required by applicable law to permit a transfer, specific criteria in Section 7.02 must be met, and you must obtain their approval. These conditions include that you, your Owners, and Affiliates must be in compliance with the provisions of the Area Development Agreement, all Franchise Agreements executed pursuant to it, and all other agreements with Noodles & Company or its Affiliate, if applicable. The proposed transferee must be a corporation, partnership, limited liability company, or other legal entity. The transferee and its owners must provide Noodles & Company with all requested information on a timely basis. The owners must be individuals acting in their individual capacities who are of good character and reputation, who must have sufficient business experience, aptitude, and financial resources to develop Noodles & Company restaurants pursuant to the Agreement, and who must otherwise meet Noodles & Company's then-current standards for approval.
Furthermore, the proposed transferee may not be, or become, an entity, or be, or become, affiliated with an entity, that is a Publicly Held Entity. The transferee and its owners must agree to be bound by all of the provisions of Noodles & Company's then-current Area Development Agreement for the remainder of the Term. You and your Owners must execute a noncompetition covenant, in form and substances satisfactory to Noodles & Company, in favor of Noodles & Company and the transferee agreeing that, for a period of two years, starting on the effective date of the transfer, you and your Owners will not, directly or indirectly (such as through a member of his or their Immediate Families), own any legal or beneficial interest in, or render services or give advice to: (1) any Competitive Business; or (2) any entity that grants franchises, licenses, or other interests to others to operate any Competitive Business in any Designated Market Area (as defined by Nielsen Media Research) where a Noodles & Company Restaurant is located, whether Company-owned or franchised, or within any area that is or was within an Area Development Area or a Protected Area, as those terms are defined in the Area Development Agreement and Franchise Agreement.
Noodles & Company must determine that no applicable federal or state statute, regulation, rule, or law, which is enacted, promulgated, or amended after the date hereof, may have a material adverse effect on their rights, remedies, or discretion with respect to their relationship with the proposed transferee. You and your Owners and Affiliates must execute such other documents and do such other things as Noodles & Company reasonably require to protect their rights under this Agreement, any Franchise Agreements, and any other agreements being transferred. The transferee must have obtained an acceptable assignment of Lease(s) from each landlord for each Noodles & Company restaurant contemplated by this Agreement and as to each restaurant which is proposed to be transferred. The transferee, after the transfer, must own the minimum number of Noodles & Company restaurants they require of other Area Operators.