Under what conditions 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 Noodles & Company's 2025 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 assessment of its own interests and balancing those interests against the interests of the owners of Noodles & Company Restaurants generally, including its affiliates and other area operators. The document specifies that, in the absence of bad faith, no third party in any legal action or arbitration proceeding shall substitute its judgment for Noodles & Company's judgment.
This means that as a Noodles & Company franchisee, you are agreeing that Noodles & Company can make decisions that affect your business, even negatively, as long as they are acting in what they believe is the best interest of the overall Noodles & Company system and not specifically intending to harm you. It also means that challenging Noodles & Company's decisions will be difficult unless you can prove they acted in bad faith, which can be a high legal bar to clear.