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Considering a Noodles & Company Franchise? Don’t Overlook These 19 Important Franchise Fees

by Franchise Chatter on February 23, 2017

in Fast Casual Restaurant Franchise, Franchise Fees



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Noodles & Company Photo by fensterj

This post was updated on July 23, 2017 to reflect information from Noodles & Company’s 2017 FDD.

If you are considering a Noodles & Company franchise, don’t get blindsided by these 19 important franchise fees (from the initial franchise fee, to the royalty fee, to 17 other fees found in Items 5 and 6 of Noodles & Company’s 2017 FDD).



1.  Development Fee:  $10,000 to $35,000

  • Under the Area Development Agreement, you must pay a non-refundable development fee of $35,000 for the first Noodles & Company restaurant contemplated to be opened by you and $10,000 for each additional Noodles & Company restaurant you have agreed to open under the Area Development Agreement (“Development Fee”).
  • The Development Fee is payable upon execution of the Area Development Agreement. The number of Noodles & Company restaurants that you may develop under a particular Area Development Agreement is determined by mutual agreement.
  • The number of Noodles & Company restaurants that you may develop will depend on a variety of factors, including:
  • (1) the existing population and anticipated population growth within the Development Area;
  • (2) competition within the Development Area;
  • (3) the availability of acceptable locations; and
  • (4) the number of Noodles & Company restaurants the franchisor estimates can be developed within the Development Area.
  • The Development Fee is uniform for all franchisees, no portion of the Development Fee is refundable, and, except as provided below, the Development Fee is not credited against any other fees.

2.  Franchise Fee:  $35,000

  • The Franchise Fee is $35,000 per restaurant. The Franchise Fee is due on the first to occur of:  (1) the commencement of construction; (2) execution of the Franchise Agreement; or (3) the date the franchised restaurant is required to be opened under the Area Development Agreement.
  • The $35,000 Development Fee paid for the first Noodles & Company restaurant you are required to develop will be credited against the Franchise Fee due to the franchisor under the Franchise Agreement for that restaurant.
  • For each additional Noodles & Company restaurant you are required to develop under the Area Development Agreement, the $10,000 Development Fee for each restaurant will be credited against the Franchise Fee due to the franchisor under the Franchise Agreement for that restaurant, leaving a balance of $25,000.
  • These credits will only be applied if the total Development Fee due for all Noodles & Company restaurants you are required to develop under the Area Development Agreement was timely and fully paid.
  • Except for the credits described above, and in the case of a sale of a Company-owned Restaurant, operation in a Non-Traditional Venue, or joint venture, if any, the $35,000 Franchise Fee is uniform to all Area Operators currently purchasing a franchise.
  • No portion of the Franchise Fee is refundable.
  • Except as noted, all fees below are payable to Noodles & Company, are non-refundable, and are uniformly imposed on franchises.

3.  Royalty:  5.0% of Net Royalty Sales

  • Due Date:  Payable on 1st business day immediately following each “Reporting Period.”
  • Payment is made by automatic electronic withdrawal.
  • The term “Net Royalty Sales” means the aggregate amount of all sales of food, beverages, wine and beer, and other products and merchandise sold and services rendered at the restaurant location or otherwise rendered to or for your Noodles & Company restaurant or your use of the Marks, including sales at or away from your Noodles & Company restaurant, whether for cash or credit, and regardless of collection in the case of credit, but excluding:
  • (1) all federal, state, or municipal sales or service taxes collected from customers and paid to the appropriate taxing authority; and
  • (2) all bona fide, documented:  (a) customer promotional discounts approved by the franchisor; (b) refunds; (c) voids; and (d) employee meal discounts.
  • A Reporting Period is defined as each one-week period commencing on Wednesday and ending on Tuesday, or other period as the franchisor may determine.
  • A Sweep Period will be the period of time for which a Sweep of the Area Operator’s account has been made by Noodles & Company to obtain the Royalty Fee, BDF, MAF, or any other fees or payments due, but for which a prior Sweep was not made.
  • On occasion, Noodles & Company may consider reducing the royalty fee or offering a development incentive to fit a particular concern, taking into account a variety of factors, including, but not limited to, where a franchisee agrees to develop a significant number of Franchised Restaurants, a franchisee agrees to significantly accelerate historical development patterns, a franchisee agrees to develop Franchised Restaurants in a new territory, or a franchisee proposes to develop unique sites.
  • These items include amounts paid to each marketing fund, marketing cooperative, and amounts generally expended by you for marketing your Noodles & Company restaurant.

4.  Brand Development Fund (“BDF”):  currently 0.0% of Net Royalty Sales

  • Currently, you do not pay a BDF fee, but the franchisor reserves the right to collect a BDF fee in the future upon notice to you that it will begin collecting this fee.
  • The franchisor will collect the BDF from you each Reporting Period.

5.  Field Marketing Funds (“FMF”):  currently 1.25% of Net Royalty Sales

  • Due Date:  Not paid to Noodles & Company. To be spent locally.
  • Amounts spent locally subject to review and approval by Noodles & Company.
  • The franchisor may require documentation from you demonstrating that you have spent your FMF on acceptable Field Marketing activities as approved by Noodles & Company in its sole discretion for each of your fiscal quarters.
  • You must pay directly the vendors or partners in the marketing program as the program is implemented and must provide documentation regarding all payments on the 15th day of each month to Noodles & Company upon the franchisor’s written request.
  • If you do not spend the required FMF, the franchisor may collect the funds from you and spend them on Field Marketing on your behalf.

6.  Marketing Administration Fee (“MAF”):  currently 1.0% of Net Royalty Sales



  • Due Date:  Payable on 1st business day immediately following each “Reporting Period.”
  • Payment is made by automatic electronic withdrawal.
  • The franchisor will collect the MAF from you each Reporting Period.

7.  Cooperative:  determined by cooperative

  • Due Date:  To be determined by Noodles & Company.
  • The franchisor may also organize a number of advertising cooperatives in the future. If it requires you to contribute to a cooperative in the future, the franchisor will credit your contribution toward your required FMF expenditure.
  • If the franchisor provides you and your cooperative 30 days’ notice of a special promotion, you must participate and pay any special promotion fees the franchisor assesses. These fees will be in addition to your Field Marketing requirement.
  • The franchisor may adjust and/or increase any or all of the BDF, FMF, or MAF contribution requirement up to an aggregate maximum of 5.5% of Net Royalty Sales and it may reallocate the funds in the future.
  • Additionally, the franchisor may increase the aggregate amount of the BDF, FMF, and MAF to an aggregate amount in excess of 5.5% of Net Royalty Sales if 66.0% of the then-existing Company-owned and Franchise-owned Restaurants vote to approve any proposed increase.

8.  Renewal of Franchise:  then-current standard Franchise Fee and the franchisor’s associated costs

  • Due Date:  Upon grant of successor franchise.

9.  Additional Training:  will vary if incurred

  • Due Date:  When training is scheduled.
  • “Additional Training” is training to set up your certified training restaurant, training you request, or training the franchisor deems you or your personnel need, in addition to the training it provides to Area Operator, your 1st Area Operating Partner, and the general manager for each of your first two restaurants.

10.  Quality Control Program:  varies

  • Due Date:  Ongoing.
  • You must participate in the franchisor’s then-current programs, as amended, at your cost and expense.
  • Payable to the franchisor or others as applicable; payment made by electronic withdrawal if to the franchisor.

11.  Interest on Late Payments:  1.5% per month or the maximum rate allowed by law, whichever is less

  • Due Date:  Immediately.
  • The interest rate applies to any money you owe the franchisor or any of its affiliates after the due date; payment made by electronic withdrawal.

12.  Fees to Evaluate and Approve Alternative Suppliers:  the franchisor’s reasonable costs and expenses, which currently are expected to range between $0 and $2,000 per sku, although costs could greatly exceed those amounts depending on the product



  • Due Date:  Upon receipt of the franchisor’s bill.
  • The franchisor may impose reasonable inspections and supervision fees to cover its costs in evaluating and maintaining alternative brands or suppliers you propose in accordance with the Franchise Agreement; payment made by electronic withdrawal.

13.  Audit:  cost of audit, which is expected to range between $3,000 and $4,000, if a discrepancy is found in accordance with the Franchise Agreement

  • Due Date:  Completion of audit.
  • Payable only if you fail to furnish required information or if the franchisor finds an understatement of Net Royalty Sales greater than 1.0%; payment made by electronic withdrawal.

14.  Insurance:  will vary if incurred

  • Due Date:  Will vary as incurred.
  • If you fail to obtain the required insurance coverage for the Noodles & Company restaurant, the franchisor may obtain coverage at your expense.
  • You must list Noodles & Company as an additional insured on all policies.

15.  Maintenance costs:  will vary if incurred

  • Due Date:  As incurred.
  • If you fail or refuse to maintain the Noodles & Company restaurant as required, the franchisor has the right to do so on your behalf and at your expense and you must cover its expenses in doing so.

16.  Attorneys’ fees and other costs:  will vary if incurred

  • Due Date:  As incurred.
  • Payable if the franchisor prevails in any legal dispute with you.

17.  Indemnification:  will vary if incurred

  • Due Date:  As incurred.
  • You must reimburse the franchisor if it is held liable for claims arising out of your franchise operations.

18.  Transfer of Franchise:  $3,500 per restaurant transferred or the amount stated in the franchisor’s then-current Franchise Agreement. This is in addition to any other transfer fees required under any other agreements with the franchisor or its affiliate, and payment of all of the franchisor’s costs associated with the transfer.

  • Due Date:  Upon sale or transfer of a franchised restaurant.
  • Except in the case of a transfer to a corporation formed solely for the convenience of ownership or under circumstances regarding death or disability, you must pay the franchisor a transfer fee.
  • Transfers are not allowed without the franchisor’s consent unless the law requires the franchisor to permit the transfer.

19.  Transfer of Development Agreement:  $7,500, or the amount stated in the franchisor’s then-current ADA, for each Noodles & Company restaurant contemplated to be, but not yet, developed under the ADA. This is in addition to any other transfer fees required under other agreements with the franchisor or its affiliates, and payment of all of the franchisor’s costs associated with the transfer.

  • Due Date:  Upon transferring the ADA.
  • Except in the case of a transfer to a corporation formed solely for the convenience of ownership or under circumstances regarding death or disability, you must pay the franchisor a transfer fee.
  • Transfers are not allowed without the franchisor’s consent unless the law requires the franchisor to permit the transfer.

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