Under what conditions does the Noodles & Company Franchise Agreement NOT restrict competitive activities related to owning shares of a publicly traded company?

According to the 2025 Noodles & Company Franchise Disclosure Document, the restrictions on competitive activities do not apply to certain ownership of publicly traded securities. Specifically, a franchisee is not restricted from owning shares of a class of securities that are listed on a public stock exchange or traded on the over-the-counter market, provided that such shares represent less than 5% of that class of securities.

This provision allows a Noodles & Company franchisee to invest in publicly traded companies, even those that might be considered competitive businesses, as long as their ownership stake remains below the 5% threshold. This is a fairly standard clause in franchise agreements, as it allows franchisees to diversify their investments without necessarily posing a significant competitive threat to the franchisor.

It is important for prospective Noodles & Company franchisees to understand this exception, as it provides some flexibility in their investment strategies. However, they should also be aware that exceeding the 5% ownership threshold could be considered a violation of the franchise agreement and could potentially lead to legal repercussions. Franchisees should consult with a legal professional to ensure they fully understand the implications of this clause and how it might affect their investment decisions.