How is the value of the inventory determined for a Noodles & Company franchise purchase?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
The purchase price for the Assets ("Purchase Price") shall be their fair market value, (or, for leased assets, the fair market value of Area Operator's lease) determined as of the effective date of purchase in a manner that accounts for reasonable depreciation and condition of the Assets less the amount of any liabilities associated with the Assets which we elect, in our sole discretion, to assume; provided, however, that the Purchase Price shall take into account the termination of this Agreement.
Further, the Purchase Price for the Assets shall not contain any factor or increment (including goodwill) for any trademark, service mark or other commercial symbol used in connection with the operation of the Noodles & Company Restaurant.
We may exclude from the Assets purchased in accordance with this Section any equipment, vehicles, furnishings, fixtures, signs, and inventory that are not approved as meeting then-current standards for a System Restaurant or for which Area Operator cannot deliver a bill of sale in a form satisfactory to us.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, the purchase price for the assets, including inventory, will be the fair market value as of the purchase date. This valuation accounts for reasonable depreciation and the condition of the assets. Any liabilities associated with the assets that Noodles & Company chooses to assume will be deducted from the purchase price.
Notably, the purchase price will not include any value for trademarks or other commercial symbols associated with the Noodles & Company Restaurant. Noodles & Company also has the option to exclude any equipment, vehicles, furnishings, fixtures, signs, and inventory that do not meet the current system standards or for which the Area Operator cannot provide a satisfactory bill of sale.
This valuation method is fairly standard in franchise agreements. It protects Noodles & Company from overpaying for assets that do not meet their current standards or are encumbered by liabilities. For a prospective franchisee, this means that the resale value of their franchise assets, including inventory, will depend heavily on maintaining the assets in good condition and adhering to Noodles & Company's system standards. It is important to maintain detailed records and ensure compliance with brand standards to maximize potential resale value.