Under what conditions will Noodles & Company approve the transfer of an Area Development Agreement?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
gement of your restaurant. | | l. Our approval of transfer by | Section 7.01 | We have the right to approve all | | you | | transfers. |
| m. Conditions for our approval of transfer | Section 7.02 | You and your Owners and affiliates must be in compliance with Area Development Agreement; the proposed transferee must be an entity that is not publicly held and meets our qualifications and standards for approval; the proposed transferee must agree to be bound to our then current Area Development Agreement for the remainder of the Development Term; all rights to your not yet developed and/or operating Noodles & Company restaurants must be transferred; transfer fee must be paid; you must sign a general release and non-compete agreement; we must approve price and payment terms; we must waive our right of first refusal; any financing you provide to the proposed transferee must be subordinate to the transferee's obligations to pay amounts due to us; there must have been no change in the law since we entered into the Area Development Agreement that would limit our right as to the proposed transferee; the proposed transferee must obtain assignment of leases from all landlords; after the transfer, the proposed transferee must own the minimum number of restaurants that we require of Area Operators; and you must meet any other reasonable requirements we may impose to protect our rights. |
|---|---|---|
| n. Our right of first refusal to acquire your business | Section 7.06 | We have the right to purchase your Development Rights for the same price and on the same terms and conditions as any bona fide offer for your business. |
| o. Our right to purchase your | Not applicable | |
| business | ||
| p. Your death or disability | Section 7.05 | Upon death or disability of your Operating Partner or any Owner of a controlling interest in you, all rights of that person in your Area Development Agreement or you must be assigned to an approved buyer within a reasonable time period not to exceed 6 months after the death or disability. |
| q. |
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, the company has specific conditions that must be met for the approval of an Area Development Agreement transfer. These conditions ensure that the new transferee is qualified and that the transfer protects Noodles & Company's interests and rights.
To start, the franchisee and their owners/affiliates must be in compliance with the existing Area Development Agreement. The proposed transferee must be a non-publicly held entity that meets Noodles & Company's qualifications and standards. The transferee must also agree to adhere to the current Area Development Agreement for the remainder of its term. All rights to undeveloped or operating Noodles & Company restaurants must be transferred to the new party.
Additionally, a transfer fee must be paid, and the transferring franchisee must sign a general release and non-compete agreement. Noodles & Company must approve the price and payment terms of the transfer and waive their right of first refusal. If the transferring franchisee provides financing to the transferee, it must be subordinate to the transferee's obligations to Noodles & Company. The proposed transferee must also obtain assignments of leases from all landlords. After the transfer, the transferee must own the minimum number of restaurants required by Noodles & Company for Area Operators. Finally, the transferring franchisee must meet any other reasonable requirements imposed by Noodles & Company to protect its rights.
Noodles & Company also retains the right of first refusal to purchase the Development Rights for the same price and terms as any legitimate offer for the business. In the event of the death or disability of an Operating Partner or an Owner with a controlling interest, the rights must be assigned to an approved buyer within six months.