Under what conditions does Noodles & Company have discretion to make decisions that may affect a franchisee's interests?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
Additionally, if applicable law shall imply such covenant, we and you acknowledge and agree that: (a) this Agreement (and the relationship of the parties which arises from this Agreement) 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 Affiliate and other Area Operators), and specifically without considering your individual interests or the individual 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 Noodles & Company's 2025 Franchise Disclosure Document, the franchise agreement grants Noodles & Company the discretion to make decisions, take actions, or refrain from taking actions that may affect a franchisee's interests, provided these actions are consistent with the franchisee's explicit rights and obligations under the agreement. This means Noodles & Company can make choices that could impact a franchisee's business, whether positively or negatively.
Noodles & Company will use its judgment based on its own interests and in consideration of the interests of all Noodles & Company restaurants, including those owned by themselves, affiliates, and other area operators. Importantly, Noodles & Company will not specifically consider the individual interests of any particular franchisee when making these decisions. This approach is typical in franchising, where the franchisor must balance the needs of the entire system.
Noodles & Company will not be liable to the franchisee for exercising its discretion unless such discretion is exercised in bad faith. Furthermore, in any legal action or arbitration, the decision-maker (e.g., a judge or arbitrator) will not override Noodles & Company's judgment as long as it was exercised in good faith. This clause emphasizes the significant latitude Noodles & Company has in making business decisions that affect its franchisees, reinforcing the importance of a franchisee understanding the potential for decisions that may not align perfectly with their individual interests.