Franchise Agreement

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Sample Franchise Agreement

NOODLES DEVELOPMENT, L.P.

FRANCHISE AGREEMENT

This Franchise Agreement ("Agreement") is made, entered into and effective this____

day of__________, 2005 ("Effective Date"), between Noodles Development, L.P., a Texas

limited partnership, with its principal office at 14500 N. Northsight Blvd., Suite 216, Scottsdale,

Arizona 85260 ("Noodles Development"), and_______________________________________

a(n)________________("Franchisee").

WHEREAS, Noodles Development has developed a distinctive business system for operating and franchising quick service restaurants that serve high quality noodle-based food items of various ethnic origin and beverage items in a distinctive atmosphere under the name "Oodles the Art of Fresh " ("System"). Noodles Development has publicized the name "Oodles the Art of Fresh " to the public as an organization of restaurant businesses operating under the System; and

WHEREAS, the System contains distinctive concepts which include, without limitation, special seasonings, spices, sauces, recipes and menu items; unique cooking methods; distinctive building design, decor and furnishings; standards, specifications and procedures for operations; consistency and uniformity requirements for the food items, products and services offered to the public; procedures for quality and inventory control, training, and assistance; and, advertising and promotional programs; and

WHEREAS, Noodles Development has the right and authority to license the use of the name Oodles the Art of Fresh™ and other trademarks, trade names, service marks, logos and commercial symbols, and phrases, slogans and tag lines which are now owned or which will be developed by Noodles Development ("Marks") for use in connection with the System to selected persons, businesses or entities that will comply with the uniformity requirements and quality standards of Noodles Development. Noodles Development will continue to develop, use, and control the use of the Marks in order to identify for the public the source of the food items, products and services marketed under the System, and to represent to the public the System's high standards of quality, appearance, cleanliness and service; and

WHEREAS, Franchisee desires to develop and operate a Oodles the Art of Fresh™ Restaurant ("Franchisee! Restaurant") at the location set forth in Section 1 in conformity with the System and the uniformity requirements and quality standards as established and promulgated occasionally by Noodles Development; and

WHEREAS, Franchisee understands and acknowledges the importance of the high standards of quality, appearance, procedures, controls, cleanliness and service established by Noodles Development, and the necessity of operating a Franchised Restaurant in strict conformity with the standards and specifications established by Noodles Development; and

WHEREAS, Noodles Development is willing to provide Franchisee with recipes, cooking and food preparation techniques, menu content and design, proto-typical restaurant layout and decor, technology, and operational, marketing, advertising, promotional and business

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information, experience ("Know How") about the Oodles the Art of Fresh Restaurant that has been developed over time by Noodles Development at a significant cost and investment; and

WHEREAS, Franchisee acknowledges that it would take substantial capital and human resources to develop a business similar to the Franchised Restaurant and, for those reasons, Franchisee desires to acquire the right to use the Marks and the System and to operate a Franchised Restaurant pursuant to the terms and conditions set forth in this Agreement; and

WHEREAS, Franchisee acknowledges that Noodles Development would not award a Franchised Restaurant to Franchisee or provide Franchisee with the business information and Know How about the System unless Franchisee agreed to comply with all of the terms and conditions of this Agreement and agreed to pay the Initial Franchise Fee, the Continuing Royalty Fees and Franchisee's percentage of the Corporate Advertising Budget specified in this Agreement; and

WHEREAS, Franchisee acknowledges that it has had a full and adequate opportunity to read and review this Agreement and to be thoroughly advised of the terms and conditions of this Agreement by an attorney or other personal representative, and has had sufficient time to evaluate and investigate the System, the financial requirements and the risks associated with the System.

Pursuant to the above premises and in consideration of the mutual promises and covenants set forth in this Agreement, Noodles Development and Franchisee agree and contract as follows:

1.        GRANT OF FRANCHISE

1.1       Franchised Location. Noodles Development hereby grants Franchisee the personal right to operate one Franchised Restaurant in conformity with the System using the name Oodles the Art of Fresh™ and other specified Marks at the following single location

__________________________which is referred to as the "Franchised Location." Franchisee

understands, acknowledges and agrees that Franchisee is not receiving any exclusive or protected territorial rights other than the exclusive right to operate a Franchised Restaurant at the Franchised Location. In the event Franchisee desires to relocate the Franchised Restaurant from the Franchised Location to a new location, Franchisee shall pay to Noodles Development the relocation fee ("Relocation Fee") as detailed in the Operations Manual, and as adjusted periodically in Noodles Development's sole discretion.

1.2       Undetermined Franchised Location. If the Franchised Location has not yet been determined as of the date of this Agreement, then the geographic area in which the Franchised Restaurant is to be located will be described or otherwise defined in an exhibit signed by the parties and attached to this Agreement. At such time as the address of the Franchised Location is determined, then the address will be inserted into this Agreement and initialed by the parties.

1.3       Lease Or Purchase Of Franchised Location. Franchisee will not sign any lease, purchase agreement or obtain any related rights to possession, occupancy or ownership of the Franchised Location before obtaining the written approval of Noodles Development. Franchisee must submit a copy of the proposed lease or purchase agreement to Noodles Development for

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review and approval in accordance with Noodles Development's then-current requirements and the lease must incorporate the additional terms required by this Agreement as set forth in the Addendum to Lease attached to this Agreement as Attachment C. If Franchisee leases the Franchised Location, then the lease term shall coincide with the Initial Term of this Agreement. In addition, the lease agreement must provide Noodles Development with the right to enter the premises to make any modifications necessary to protect the Marks and a Collateral Assignment of Lease, in the form substantially similar to that in Attachment C-l attached hereto, signed by Franchisee and Noodles Development. If Noodles Development exercises its rights under any Collateral Assignment of Lease, Noodles Development shall have all rights that Franchisee would have had under the lease agreement had it continued in effect with Franchisee.

1.4       Conditions. Franchisee hereby undertakes the obligation to operate a Franchised Restaurant using the System at the Franchised Location in strict compliance with the terms and conditions of this Agreement for the entire Initial Term of this Agreement and any Interim Period. The rights and privileges granted to Franchisee by Noodles Development under this Agreement are applicable only to the single location designated as the Franchised Location, are personal in nature, and may not be used elsewhere or at any other location by Franchisee.

1.5       Personal License. Franchisee shall not have the right to franchise, subfranchise, license or sublicense its rights under this Agreement. Franchisee will not have the right to pledge, assign or transfer this Agreement or its rights under this Agreement, except as specifically provided for in this Agreement.

2.        TERM OF AGREEMENT

2.1        Term. The initial term ("Initial Term") of this Agreement will be for ten (10) years, commencing on the Effective Date of this Agreement, unless earlier terminated in accordance with the terms and conditions of this Agreement. This Agreement will not be enforceable until it has been signed by both Franchisee and Noodles Development.

2.2       Franchisee's Option to Reacquire Franchise. At the end of the Initial Term of this Agreement, Franchisee shall have the right and option to reacquire the franchise rights ("Franchise") for the Franchised Location for the term of Noodles Development's then-current franchise agreement ("Successor Term"), provided that Franchisee has complied with all material terms and conditions of this Agreement throughout its Initial Term, and provided that Franchisee has agreed to and has complied in all respects with the following conditions: (a) Franchisee has given Noodles Development written notice, not more than twelve (12) months and not less than six (6) months before the end of the Initial Term of this Agreement, of its intention to reacquire the Franchise for the Franchised Location; (b) all monetary obligations owed by Franchisee to Noodles Development have been paid or satisfied before the end of the Initial Term of this Agreement, and have been timely met throughout the Initial Term of this Agreement; (c) Franchisee has agreed, in writing, to make the reasonable capital expenditures necessary to remodel, modernize and redecorate the Franchised Location, and to replace and modernize the signs, furniture, fixtures, supplies and equipment used in the Franchised Restaurant so that the Franchised Restaurant will reflect the image portrayed by the then-current image, decor and specifications of Noodles Development, in the sole discretion of Noodles Development; (d) as of the date Franchisee exercises its option to reacquire the Franchise for the

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Franchised Location, Franchisee either owns the Franchised Location, or Franchisee has the right to lease the Franchised Location for a term that coincides with the Successor Term of the then-current franchise agreement; (e) Franchisee or Franchisee's designated operating partner ("Operating Partner") have completed the required training designated by Noodles Development for new franchisees to ensure that Franchisee is in conformity with the then-current qualifications and operational requirements established by Noodles Development; and (f) Franchisee agrees to sign and comply with the then-current franchise agreement ("Successor Franchise Agreement") being offered to new franchisees by Noodles Development, subject further to the provisions of Section 2.3 of this Agreement.

2.3 Terms of Option. Franchisee will have the option to reacquire the Franchise for the Franchised Location under the same terms and conditions, with the exception of the Initial Franchise Fee as described in this Section, as are then being offered to other franchisees under the then-current Franchise Agreement. Franchisee will be required to pay Noodles Development a successor franchise fee ("Successor Franchise Fee") equal to ten percent (10%) of the then-current Initial Franchise Fee which will be payable in full on the date Franchisee signs the then-current Franchise Agreement signed pursuant to this option. For the term of the Successor Franchise Agreement signed pursuant to this option, Franchisee will be required to pay the Continuing Royalty Fee set forth in that Franchise Agreement. Franchisee will also be required to pay CAB Contributions (as defined in Section 5.1) and other fees at the rates specified in the Successor Franchise Agreement, and any additional fees specified or provided for by the terms of the Successor Franchise Agreement, Franchisee acknowledges that the terms, conditions and economics of future Franchise Agreements of Noodles Development may, at that time, vary in substance and form from the terms, conditions and economics of this Agreement, and Franchisee hereby accepts the risk that the fees will be higher than the fees imposed on Franchisee under the terms of this Agreement.

3.         INITIAL FRANCHISE FEE

3.1 Initial Franchise Fee. Franchisee will pay Noodles Development an initial franchise fee ("Initial Franchise Fee") of Twenty-Five Thousand Dollars ($25,000), all of which will be paid by Franchisee to Noodles Development on the day Franchisee signs this Agreement. The Initial Franchise Fee is fully earned by Noodles Development on the day on which it is paid and is non-refundable under any circumstances.

4.         CONTINUING FEES

4.1 Continuing Royalty Fee; Date Payable. In addition to the Initial Franchise Fee payable by Franchisee, Franchisee will, each week during the entire Initial Term of this Agreement and any Interim Period, pay Noodles Development a weekly continuing royalty fee ("Continuing Royalty Fee") equal to six percent (6%) of Franchisee's weekly Gross Sales for the preceding week. The Continuing Royalty Fee will be paid to Noodles Development by Franchisee on Tuesday of the week following the reported sales. Noodles Development reserves the right to require payment from Franchisee of all Continuing Royalty Fees due and owing to Noodles Development in any form and manner as Noodles Development may determine occasionally, in Noodles Development's sole discretion, including weekly debits from Franchisee's bank account as set forth in Section 4.5.

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4.2       Interest on Unpaid Continuing Royalty Fees. If Franchisee fails to remit any Continuing Royalty Fee due to Noodles Development as provided for in Section 4.1, then the amount of the unpaid and past due Continuing Royalty Fee will bear simple interest at the lesser of the maximum legal rate allowable by applicable law or the rate of one and one-half percent (1.5%) per month. Franchisee will also reimburse Noodles Development for any and all costs incurred by Noodles Development in the collection of any unpaid and past due Continuing Royalty Fee payment including, but not limited to, attorneys' fees, deposition costs, expert witness fees, investigation costs, accounting fees, filing fees and travel expenses.

4.3       Reports. Franchisee will maintain an accurate written record of the weekly Gross Sales for Franchisee's Franchised Restaurant and other information specified by Noodles Development, and will submit a weekly report for the Franchised Restaurant using the forms and formats set forth in the Operations Manual. The weekly reports will be e-mailed or faxed to Noodles Development by Tuesday of each week for the preceding week. The weekly reports will include Franchisee's weekly Gross Sales, labor costs, and any other information as may be required by Noodles Development occasionally, in Noodles Development's sole discretion.

4.4       Franchisee's Obligation to Pay. The Continuing Royalty Fee payable to Noodles Development under this Section will be calculated and paid to Noodles Development by Franchisee each week during the entire Initial Term of this Agreement and any Interim Period, and Franchisee's failure to timely pay the weekly Continuing Royalty Fee to Noodles Development will be deemed to be a material breach of this Agreement. Franchisee's obligation to pay Noodles Development the weekly Continuing Royalty Fee pursuant to the terms of this Agreement shall be absolute and unconditional, and shall remain in full force and effect until the Initial Term of this Agreement or any Interim Period has expired or until this Agreement has been terminated in accordance with the terms and conditions set forth in this Agreement and applicable law. Franchisee will not have the "right of offset" and, as a consequence, Franchisee shall timely pay all Continuing Royalty Fees due to Noodles Development under this Agreement regardless of any claims or allegations Franchisee may allege against Noodles Development.

4.5       Pre-Authorized Bank Debits. Franchisee will sign the Request for Pre-Authorized Payments, attached to this Agreement as Attachment D, to provide Franchisee's unconditional and irrevocable authority and direction to its bank authorizing and directing Franchisee's bank to pay and deposit directly to the account of Noodles Development, and to charge to the account of Franchisee, the amount of the weekly Continuing Royalty Fee payable by Franchisee pursuant to this Agreement on Tuesday of the week following the reported sales. If Franchisee fails at any time to provide the weekly reports required under Section 4.3, then Noodles Development will have the absolute right to debit Franchisee's bank account for the same amount as the most recent debit to Franchisee's bank account that was based on actual Gross Sales provided by Franchisee. Franchisee will, at all times during the Initial Term of this Agreement and any Interim Period, maintain a balance in its account at its bank sufficient to allow the appropriate amount to be debited from Franchisee's account for payment of the Continuing Royalty Fees payable by Franchisee for deposit in the account of Noodles Development.

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4.6 P.O.S. Service Fee. Franchisee shall pay to Noodles Development on the first (1st) day of each month a service fee ("P.O.S. Service Fee") of Two Hundred Twenty Dollars ($220.00) to reimburse Noodles Development for the costs and expenses it incurs in the organization and administration of point-of-sale related marketing and customer loyalty programs. Noodles Development may increase the P.O.S. Service Fee at any time in its discretion by amending the Operations Manual and providing Franchisee with thirty (30) days advance written notice.

5.        ADVERTISING

5.1        Creative Fund Contributions. In addition to the Initial Franchise Fee and Continuing Royalty Fees payable by Franchisee, Franchisee will, each week during the entire Initial Term of this Agreement and any Interim Period, pay Noodles Development a weekly creative fund contribution ("Creative Fund Contribution") equal to one-half of one percent (0.5%) of the Gross Sales for the preceding week. The Creative Fund Contribution will be paid by Franchisee on Tuesday of each week for the preceding week. The Creative Fund Contribution will be deposited into a separate bank account ("Creative Fund") which will be under the exclusive control of Noodles Development. The Creative Fund Contribution will be administered and controlled exclusively by Noodles Development, and Noodles Development will have the absolute and unilateral right to determine how, when and where the Creative Fund Contribution will be spent. This includes the absolute right to use Creative Fund Contribution for (a) the creation, development and production of advertising and promotional materials, (b) any marketing or related research and development, and (c) advertising and marketing expenses including, without limitation, the absolute right to purchase and pay for product and food research and development, advertising materials, production costs, brochures, radio, film and television commercials, videotapes, newspaper, magazine and other print advertising, direct mail pieces, photographer costs, photographs, pictures, designs, services provided by advertising agencies, public relations firms or other marketing, research or consulting firms or agencies, market research and marketing surveys, menu design and graphics, customer incentive programs, sponsorships, marketing meetings and sales incentives, development of Home Pages on the Internet, Internet access provider costs, Internet/World Wide Web programming and advertising, subscriptions to industry newsletters or magazines, marketing or industry studies, books and research materials, administrative costs and salaries for marketing support personnel. Noodles Development will have the right to spend the Creative Fund Contribution in any manner it deems appropriate. Noodles Development will have no obligation to spend any of the Creative Fund Contribution in Franchisee's Designated Market Area ("DMA"), and Franchisee acknowledges that Noodles Development will have no obligation whatsoever to spend any portion of the Creative Fund Contribution paid by Franchisee in Franchisee's DMA or specifically for the benefit of the Franchised Restaurant.

5.2       Interest on Unpaid Creative Fund Contributions. If Franchisee fails to remit any Creative Fund Contribution due to Noodles Development as provided for in Section 5.1, then the amount of the unpaid and past due Creative Fund Contribution will bear simple interest at the lesser of the maximum legal rate allowable by applicable law or the rate of one and one-half percent (1.5%) per month. Franchisee will also reimburse Noodles Development for any and all costs incurred by Noodles Development in the collection of any unpaid and past due Creative

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Fund Contribution including, but not limited to, attorneys' fees, deposition costs, expert witness fees, investigation costs, accounting fees, filing fees and travel expenses.

5.3       Franchisee's Obligation to Pay. The Creative Fund Contribution payable to Noodles Development under this Section will be calculated and paid to Noodles Development by Franchisee each week during the entire Initial Term of this Agreement and any Interim Period, and Franchisee's failure to pay the weekly Creative Fund Contribution to Noodles Development will be deemed to be a material breach of this Agreement. Franchisee's obligation to pay Noodles Development the weekly Creative Fund Contribution pursuant to the terms of this Agreement will be absolute and unconditional, and will remain in full force and effect until the Initial Term of this Agreement or any Interim Period has expired or until this Agreement has been terminated in accordance with the terms and conditions set forth in this Agreement and applicable law. Franchisee will not have the "right of offset" and, as a consequence Franchisee will timely pay all Creative Fund Contributions due to Noodles Development under this Agreement regardless of any claims or allegations Franchisee may allege against Noodles Development.

5.4       Pre-Authorized Bank Debits. Franchisee will sign the Request for Pre-Authorized Payments, attached to this Agreement as Attachment D, to provide Franchisee's unconditional and irrevocable authority and direction to its bank authorizing and directing Franchisee's bank to pay and deposit directly to the account of Noodles Development, and to charge to the account of Franchisee, the amount of the weekly Creative Fund Contribution payable by Franchisee pursuant to this Agreement on Tuesday of the week following the reported sales. If Franchisee fails at any time to provide the weekly reports required under Section 4.3, then Noodles Development will have the absolute right to debit Franchisee's bank account for the same amount as the most recent debit to Franchisee's bank account that was based on actual Gross Sales provided by Franchisee. Franchisee will, at all times during the Initial term of this Agreement and any Interim Period, maintain a balance in its account at its bank sufficient to allow the appropriate amount to be debited from Franchisee's account for payment of the Creative Fund Contribution payable by Franchisee for deposit in the account of Noodles Development.

5.5       Local Advertising Expense. Franchisee agrees to spend on local advertising each month ("Local Advertising Expense") an amount equal to three and one-half percent (3.5%) of Franchisee's Gross Sales for the previous month on local advertising and promotions. Franchisee agrees to submit to Noodles Development for prior approval all promotional and advertising materials to be used by Franchisee including, without limitation, television, radio, newspapers, fliers, magazines, billboards, special events, special promotions, and other print advertising. All advertising and promotional materials must be approved in writing by Noodles Development in advance of Franchisee's use of these materials. Noodles Development's failure to approve any advertising or promotional materials submitted by Franchisee within fifteen (15) business days shall be deemed a disapproval of the material. In the event Franchisee develops any advertising or promotional materials with the approval of Noodles Development, Noodles Development is hereby granted the unlimited right to use, reproduce, and disseminate the advertising materials to other franchisees in the System without compensation of any kind to Franchisee. Franchisee's payment of the Creative Fund Contribution of one-half of one percent (0.5%) of Franchisee's Gross Sales will not be considered expenditures for approved local

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advertising for the purposes of this provision. Franchisee shall submit such reports documenting Franchisee's Local Advertising Expense as are required by Franchisor in the Operations Manual.

5.6       Telephone Directory Listings. Franchisee will continually list and advertise in the "Yellow Pages" in Franchisee's market area under the heading "Restaurant" and/or other listings designated by Noodles Development in writing occasionally, in Noodles Development's discretion. The format, size and content of the listings and advertising will conform in all respects to the standards established by Noodles Development and specified in the Operations Manual. Franchisee will also take all steps necessary to be listed in the "White Pages" for Franchisee's market area.

5.7       Multi-Area Marketing. Franchisee must participate, at Franchisee's sole cost and expense, in any multi-area marketing programs as determined by Noodles Development, in Noodles Development's sole discretion. All Internet marketing is part of multi-area marketing and must be coordinated through and approved by Noodles Development. Franchisee may not market independently on the Internet or acquire an independent Internet domain name or Web site, but Noodles Development will include Franchisee's Franchised Restaurant on its Web site.

5.8       Franchisee Advertising Councils. Noodles Development may require the formation of franchisee advertising councils, which shall be established and administered by a majority vote of the franchisees in the region in which Franchisee operates its Franchised Restaurant. The purpose of the franchisee council will be solely to develop and implement cooperative advertising and special promotions within the region, including Yellow Pages advertising. The amount of contribution, which will be mandatory for all franchisees once a council is formed in their region, and type of advertising or promotions approved will be set by majority vote of the members of the council, but Noodles Development will not approve a contribution of more than two and one-half percent (2.5%) of any franchisee's Gross Sales. Any contribution made by Franchisee toward a local advertising council, once formed, will satisfy Franchisee's Local Advertising Expense obligation on a dollar-for-dollar basis, up to a maximum contribution of two and one-half percent (2.5%) of Franchisee's Gross Sales. Noodles Development must approve the amount of contribution, the membership of the council, the regions covered, council governing documents, and all advertising and promotions created by the council. The council must prepare annual unaudited financial statements, which must be delivered to Noodles Development and other franchisees in the council within one hundred twenty (120) days after Noodles Development's fiscal year end. Noodles Development reserves the right to form, change, dissolve, or merge councils or other advertising cooperatives.

6.        FINANCIAL STATEMENTS

6.1 Monthly Reports and Financial Statements. Franchisee will, at its expense, prepare a monthly and year-to-date balance sheet and profit and loss statement for the Franchisee's Franchised Restaurant ("Monthly Report"). Franchisee will also prepare, at its expense, annual financial statements, consisting of a balance sheet, profit and loss statement, for the Franchisee's Franchised Restaurant ("Financial Statements"). All Monthly Reports and Financial Statements provided to Noodles Development pursuant to this Section will be prepared in accordance with generally accepted accounting principles applied on a consistent basis. The Monthly Reports for the Franchised Restaurant will be delivered to Noodles Development on or

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before the twentieth (20 ) day of each month for the last preceding month. Franchisee's Financial Statements will be delivered to Noodles Development within ninety (90) days after Franchisee's fiscal year end. Franchisee's Monthly Reports and Financial Statements will be certified by an independent certified public accountant if requested by Noodles Development.

6.2       Audit Rights. Within three (3) business days after receiving written notice from Noodles Development, Franchisee and Franchisee's accountants will make all of their computer and hand prepared records and ledgers, the sales ledger, work papers, books, bank statements, federal, state, and local income tax returns, federal and state sales tax returns, daily cash register tapes, accounts, and other financial information relating to Gross Sales, food costs, labor costs and other costs ("Financial Records") available to Noodles Development during business hours for review and audit by Noodles Development or its designee. If the Financial Records are computerized, then Franchisee will grant Noodles Development or its designee the absolute right to access Franchisee's computer and software programs containing the Financial Records and the absolute right to copy the Financial Records to a computer disk or to any portable or other computer owned or controlled by Noodles Development. The Financial Records for each fiscal year will be kept in a secure place by Franchisee and will be available for audit by Noodles Development for at least three (3) years. Franchisee will provide Noodles Development with adequate facilities to conduct the audit. Noodles Development will maintain the confidentiality of all information, documents, records and other materials reviewed or copied by Noodles Development during an audit conducted by Noodles Development pursuant to this Section. However, if the information, documents, records or other materials are relevant to any issue in any mediation, arbitration or court proceeding between Noodles Development and Franchisee, then Noodles Development may disclose the information, documents, records or other materials in this proceeding.

6.3       Payment of Audit Costs. If an audit of Franchisee's Financial Records reveals any deficiencies in the Continuing Royalty Fees or CAB Contribution payable to Noodles Development, then Franchisee will, within five (5) days after receipt of an invoice from Noodles Development indicating the amounts owed, pay to Noodles Development any deficiency owed to Noodles Development, together with interest as provided for herein. If an audit by Noodles Development results in a determination that Franchisee's Gross Sales were understated by more than two percent (2%) or more in any month, or in any year, then Franchisee will, within fifteen (15) days after receipt of an invoice from Noodles Development, pay Noodles Development all costs and expenses (including employee salaries, travel costs, room and board, and audit fees) that Noodles Development incurred for the audit of Franchisee's Financial Records. In this event, Noodles Development may require Franchisee to provide only audited Monthly Reports and Financial Statements certified by an independent certified public accountant.

6.4       Refusal to Submit Records or Permit Audit. Franchisee's failure or refusal to provide the documents, records or other materials requested by Noodles Development to substantiate the Monthly Reports or Financial Statements in accordance with Section 6.2 or to produce the Financial Records in accordance with Section 6.4 will be grounds for the immediate termination of this Agreement by Noodles Development.

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7,        QUALITY CONTROL, UNIFORMITY AND STANDARDS REQUIRED OF

FRANCHISEE

7.1        Quality And Service Standards. Noodles Development has developed and will continue to develop, occasionally, uniform standards of quality, cleanliness and service regarding the business operations of Franchisee's Franchised Restaurant to protect and maintain (for the benefit of Noodles Development and all of its franchisees) the distinct, valuable goodwill and uniformity represented and symbolized by the Marks and the System. Accordingly, to ensure that all Oodles the Art of Fresh™ franchisees maintain and adhere to the uniformity requirements and quality standards for the food, products and services associated with the Marks and the System, Franchisee agrees to maintain the uniformity and quality standards required by Noodles Development for all foods, products and services associated with the Marks and the System and agrees to the terms and conditions contained in this Section to assure the public that all Oodles the Art of Fresh Restaurants will be uniform in nature and will sell and dispense quality foods, products and services.

7.2       Identification of Restaurant. Franchisee will operate the Franchised Restaurant so that it is clearly identified and advertised as a Oodles the Art of Fresh Restaurant. The style and form of the words "Oodles the Art of Fresh " and the other Marks used in any advertising, marketing, public relations or promotional program must have the prior written approval of Noodles Development. Franchisee will use the name Oodles the Art of Fresh™, the approved logos and all graphics commonly associated with the System and the Marks which now or hereafter may form a part of the System, on all paper supplies, furnishings, advertising, public relations and promotional materials, signs, stationery, business cards, linens, towels, napkins, aprons, menus, food and beverage containers, placemats, uniforms, clothing and other materials in the identical combination and manner as may be prescribed by Noodles Development in writing. Franchisee will, at its expense, comply with all legal notices of registration required by Noodles Development or its attorneys and will, at its expense, comply with all trademark, trade name, service mark, copyright, patent or other notice markings that are required by Noodles Development or by applicable law.

7.3       Compliance with Standards. Franchisee will use the Marks and the System in strict compliance with the quality standards, health standards, operating procedures, specifications, requirements and instructions required by Noodles Development, which may be amended and supplemented by Noodles Development occasionally in Noodles Development's sole discretion.

7.4       Participation in Operations. Franchisee's Franchised Restaurant shall be operated only under the direct supervision of Franchisee (if Franchisee is an individual, or the majority shareholder, partner or manager of Franchisee) and/or its Operating Partner who Noodles Development has approved and not hereafter disapproved. Any Operating Partner that Franchisee so designates to operate Franchisee's Franchised Restaurant must own an equity interest equal to at least ten percent (10%) of the Franchisee, and must also successfully complete Noodles Development's Training Program as more particularly described in Section 15 of this Agreement. Franchisee or Franchisee's designated Operating Partner shall be physically present at Franchisee's Franchised Restaurant at least forty (40) hours per week.

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7.5       Franchisee's Name. Franchisee will not use the name Oodles the Art of Fresh or any derivative thereof in its corporate, partnership or sole proprietorship name. Franchisee will hold itself out to the public as an independent contractor operating its Franchised Restaurant pursuant to a franchise from Noodles Development. Franchisee will file for a certificate of assumed name in the manner required by applicable state law to notify the public that Franchisee is operating its Franchised Restaurants an independent contractor pursuant to this Agreement.

7.6       Interests Of Operating Company. The operating company responsible for operating and managing Franchisee's Franchised Restaurant will be dedicated solely to the operation of Franchisee's Franchised Restaurant(s) and will not hold any interest in, operate, or manage any other business engaged, in whole or in part, in the production, distribution, or sale of noodle-based food items or other products either at retail or wholesale; provided, however, that this provision shall not apply to any interest in additional franchises granted by Noodles Development.

7.7       Approved Advertising. Franchisee will not conduct any advertising and/or promotion for its Franchised Restaurant unless and until Noodles Development has given Franchisee prior written approval for all concepts, materials and media proposed for any advertising and/or promotion. Franchisee will not permit any third party to advertise its business, services or products on the premises of Franchisee's Franchised Restaurant without the prior written approval of Noodles Development.

7.8       Default Notices and Significant Correspondence. Franchisee will deliver to Noodles Development, immediately upon receipt by Franchisee or delivery at the Franchised Location, an exact copy of all: (a) notices of default received from the landlord of the Franchised Location or any mortgagee, trustee under any deed of trust, contract for deed holder, lessor, or any other party with respect to the Franchised Location; (b) notifications or other correspondence relating to any legal proceeding or lawsuit relating in any way to the Franchised Restaurant or to the Franchised Location; (c) consumer complaints or claims; (d) employee complaints or claims; and (e) inspection reports or any other notices, claims, reports, warnings or citations from or by any governmental authority, including any health or safety authority. Upon a written request from Noodles Development, Franchisee will provide the additional information as may be required by Noodles Development regarding the subject matter of the correspondence or other writings received by Franchisee or delivered at the Franchised Location.

7.9       Television; Vending and Gaming Machines; Tickets. Franchisee will not permit any jukebox, video and electronic games, vending machines (including cigarette, gum and candy machines), newspaper racks, rides or other mechanical or electronic entertainment devices, coin or token operated machines (including pinball) except coin-operated telephones, or gambling machines or other gambling devices to be used on the premises of the Franchised Location, except with the prior written approval of Noodles Development which may be withheld at the sole and absolute discretion of Noodles Development. Franchisee will not keep or offer for sale or allow employees to offer for sale at or near the Franchised Location any tickets, subscriptions, pools, chances, raffles, lottery tickets or pull tabs, except with the prior written approval of Noodles Development, which may be withheld in the sole and absolute discretion of Noodles Development.

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7.10     Permitted Sales. Franchisee will offer for sale at the Franchise Location only those menu items, food products and other items approved in writing by Noodles Development.

7.11      Operation of Franchised Restaurant. Franchisee will be totally and solely responsible for the operation of its Franchised Restaurant in strict accordance with the specifications and procedures contained in the Operations Manual and other manuals and materials provided by Noodles Development occasionally. Franchisee will control, supervise and manage all the employees, agents and independent contractors who work for or with Franchisee. Franchisee will be responsible for the acts of its employees, agents, and independent contractors and will take all reasonable business actions necessary to ensure that its employees, agents and independent contractors comply with all applicable federal, state, city, local and municipal laws, statutes, ordinances, rules and regulations. Noodles Development will not have any right, obligation or responsibility to control, supervise or manage Franchisee's employees, agents or independent contractors.

7.12     Compliance With Applicable Laws. Franchisee will, at its sole cost and expense, comply with all applicable federal, state, city, local and municipal laws, statutes, ordinances, rules and regulations pertaining to the construction or Remodeling of the Franchised Location and the operation of Franchisee's Franchised Restaurant including, but not limited to, all health and food service licensing laws, all health and safety regulations, all environmental laws, all laws relating to employees, including all wage and hour laws, employment laws, workers' compensation laws, discrimination laws, sexual harassment laws, liquor laws (if applicable), and disability discrimination laws. Franchisee will, at its expense, be solely and exclusively responsible for determining the licenses and permits required by law for Franchisee's Franchised Restaurant, for qualifying for, and obtaining and maintaining all the licenses and permits, and for complying with all applicable laws.

7.13     Payment of Taxes. Franchisee will be absolutely and exclusively responsible and liable for filing all required tax returns and for the prompt payment of all federal, state, city and local taxes including, but not limited to, individual and corporate income taxes, sales and use taxes, franchise taxes, gross receipts taxes, employee withholding taxes, F.I.C.A. taxes, inventory taxes, personal property taxes and real estate taxes ("Taxes") payable in connection with Franchisee's Franchised Restaurant. Noodles Development will have no liability for these or any other Taxes which arise or result from the Franchisee's Franchised Restaurant and Franchisee will indemnify Noodles Development for any Taxes that may be assessed or levied against Noodles Development which arise out of or result from the operation of the Franchised Restaurant.

7.14     "Franchise" and Other Taxes. If any "franchise" or other tax which is based upon the amount of the Initial Franchise Fees paid to Noodles Development, Franchisee's Gross Sales, receipts, sales, or business activities, or the operation of the Franchised Restaurant is imposed upon Noodles Development by any taxing authority, then Franchisee will reimburse Noodles Development in an amount equal to the amount of the taxes and related costs imposed upon and paid by Noodles Development. Franchisee will be notified in writing when Noodles Development is entitled to reimbursement for the payment of the taxes and, in that event, Franchisee will pay Noodles Development the amount specified in the written notice within ten (10) days after receipt of the written notice.

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7.15     Standard Attire or Uniforms. Franchisee will require its employees to wear the standard attire or uniforms described in the Operations Manual. All employees of Franchisee will wear clean and neat attire or uniforms and will practice good personal hygiene.

7.16     Business Hours; Personnel. Franchisee's Franchised Restaurant will be open for business twelve (12) months of each year on the days and during the hours specified by Noodles Development in the Operations Manual, which in no event will be less than sixty (60) hours per week, and as modified by Noodles Development periodically in its sole discretion. Franchisee will at all times during business hours have management personnel on duty who are responsible for supervising the employees and the business operations of the Franchised Restaurant. Franchisee will have a sufficient number of adequately trained and competent service, kitchen and other personnel on duty to guarantee efficient service to Franchisee's customers.

7.17     Inspection Rights. Franchisee will permit Noodles Development or its representatives to enter, remain on, and inspect the Franchised Location, whenever Noodles Development reasonably deems it appropriate and without prior notice, to interview Franchisee's employees, customers and suppliers, to take photographs and videotapes of and to examine the interior and exterior of the Franchised Location, to examine representative samples of the food, beverages and other products sold or used at the Franchised Restaurant and to evaluate the quality of the food, beverages, products and services provided by Franchisee to its customers. Noodles Development will also have the right to send a representative of Noodles Development to dine at the Franchised Restaurant to evaluate the operations of the Franchised Restaurant and the quality of the' food and services provided by Franchisee to its customers. Noodles Development will have the right to use all interviews, photographs and videotapes of the Franchised Restaurant for these purposes as Noodles Development deems appropriate including, but not limited to, use in advertising, marketing and promotional materials. Franchisee will not be entitled to, and hereby expressly waives, any right that it may have to be compensated by Noodles Development, its advertising agencies, and other franchisees of Oodles the Art of Fresh Restaurants for the use of these photographs or videotapes for advertising, marketing and promotional purposes. Noodles Development will not use any photographs of Franchisee's employees or customers unless written releases have been obtained by Franchisee's employees or customers.

7.18     Security Interest In Franchise Agreement. This Agreement and the Franchise granted to Franchisee hereunder may not be used as collateral or be the subject of a security interest, lien, levy, attachment or execution by Franchisee's creditors or any financial institution, except with the prior written approval of Noodles Development, which approval may be withheld for any reason or no reason in the sole discretion of Noodles Development.

7.19     Credit Cards. Franchisee will honor all credit, charge, courtesy or cash cards or other credit devices required or approved by Noodles Development in writing. Franchisee must obtain the written approval of Noodles Development before honoring any unapproved credit, charge, courtesy or cash cards or other credit devices, which approval may be withheld for any reason or no reason in the sole discretion of Noodles Development.

7.20     Gift Certificates And Coupons. Franchisee will not sell or issue gift certificates unless authorized in writing in the sole discretion of Noodles Development. Franchisee will not

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issue coupons or discounts of any type except as may be approved in advance in writing by Noodles Development.

7.21      Maintenance. Franchisee will, at its expense, repair, paint and keep in a clean and sanitary condition the interior, the exterior, the parking lot, signage, exterior lighting, and the grounds of the Franchised Location and the Franchised Restaurant, and will replace all floor covering, wall coverings, light fixtures, curtains, blinds, shades, furniture, room furnishings, wall hangings, signs, fixtures and other decor items as they become worn-out, soiled or in disrepair. All mechanical equipment including ventilation, heating and air conditioning, must be kept in good working order by Franchisee at all times. All replacement equipment, decor items, furniture, fixtures, signs, supplies and other items used in the Franchised Restaurant by Franchisee must comply with the then-current standards and specifications of Noodles Development as set forth in more detail in the Operations Manual or in other communications from Noodles Development.

7.22     Remodeling of Business Premises. Franchisee will make the reasonable capital expenditures necessary to extensively remodel, modernize, redecorate and renovate ("Remodeling") the Franchised Restaurant and to replace and modernize the furniture, fixtures, supplies and equipment ("FF&E") so that the Franchised Restaurant will reflect the then-current image of a Franchised Restaurant. All Remodeling and all replacements for the FF&E must conform to the then-current specifications of Noodles Development. Franchisee will commence Remodeling the Franchised Restaurant within four (4) months after the date Franchisee receives written notice from Noodles Development specifying the required Remodeling, and will diligently complete the Remodeling within a reasonable time after its commencement. Except as provided for in Section 7.21 of this Agreement, Franchisee will not be required to remodel the Franchised Restaurant, or to replace and modernize its FF&E at any time during the first four (4) years of the Initial Term or more than once every five (5) years during the Initial Term of this Agreement. The Franchisee must pay all costs and expenses incurred as part of the Remodeling, which costs and expenses are not limited or capped by Noodles Development in any way.

7.23     Alterations To Restaurant. Franchisee will not install or permit to be installed on or above the Franchised Restaurant, without the prior written consent of Noodles Development, any fixtures, furnishings, equipment, decor, signs or other items not previously approved by Noodles Development.

7.24     Other Business. Franchisee will use the Franchised Location solely for the operation of a Franchised Restaurant and will not directly or indirectly operate or engage in any other business or activity from the Franchised Location without the prior written consent of Noodles Development. Franchisee will not participate in any dual branding program, or in any other program, promotion or business pursuant to which a trademark, service mark, trade name, logo, slogan, or commercial symbol owned by any person or entity other than Noodles Development is displayed, featured or used in connection with the Franchised Restaurant without the prior written consent of Noodles Development.

7.25     Standards of Service. Franchisee will at all times give prompt, courteous and efficient service to its customers. Franchisee will, in all dealings with its customers, suppliers

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and the public, adhere to the highest standards of honesty, integrity, fair dealing and ethical conduct.

7.26     Payments to Creditors. Franchisee will timely pay all of its obligations and liabilities due and payable to Noodles Development, suppliers, lessors and its creditors.

7.27     Employees. Franchisee will maintain a competent, conscientious and trained staff with enough personnel to operate the Franchised Restaurant in a professional and competent manner. Franchisee will take the steps as are necessary to ensure that its employees develop and preserve good customer relations, render competent, prompt, courteous and knowledgeable service and meet the quality and service standards established by Noodles Development.

7.28     Ownership of Business Records. Franchisee acknowledges and agrees that the Noodles Development owns all Business Records with respect to customers and other service professionals of, and related to, the Franchised Restaurant including, without limitation, all databases (whether in print, electronic or other form), including all names, addresses, phone numbers, e-mail addresses, customer purchase records, and all other records contained in the database, and all other Business Records created and maintained by Franchisee. Franchisee further acknowledges and agrees that, at all times during and after the termination, expiration or cancellation of this Agreement, Noodles Development may access the Business Records, and may utilize, transfer, or analyze the Business Records as Noodles Development determines to be in the best interest of the System, in Noodles Development's sole discretion.

8.        FOOD, PRODUCTS AND SERVICES

8.1       Limitations on Food, Products and Services. Franchisee will sell each and every food item, food product, beverage, service or other item ("Noodles Products and Services") approved by Noodles Development in writing or as designated in the Operations Manual. Franchisee shall not offer any additional food items, product or service other than those approved in writing by Noodles Development or as designated in the Operations Manual, unless specifically approved in writing by Noodles Development. Franchisee understands that Noodles Development may change, add or delete any of the Noodles Products and Services occasionally in Noodles Development's sole discretion. Franchisee shall offer all new or additional Noodles Products and Services that Noodles Development required to be added as part of a special campaign or weekly, monthly or seasonal special. Franchisee will maintain sufficient inventories of all food items, food products, beverages and other items to realize the full potential of the Franchised Restaurant. Franchisee will conform to all customer service standards prescribed by Noodles Development in writing. Franchisee will have the absolute right to sell all Noodles Products and Services at whatever prices and on whatever terms it deems appropriate; however, Noodles Development shall have the right to set maximum resale prices for any Noodles Products and Services sold from the Franchised Restaurant in connection with any national, regional, or multi-area marketing or special price promotion program developed and implemented by Noodles Development for the System.

8.2       Limitation On Sales. Franchisee will offer for sale and sell those Noodles Products and Services offered for sale in connection with the Franchised Restaurant or which are sold under any of the Marks only on a retail basis at the Franchised Location. Franchisee will

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not offer for sale or sell on a wholesale or retail basis at any other location or in any other premises, or by means of the Internet, catalogue or mail order sales, telemarketing, or by any other method of sales or distribution, any of the food, products and services offered for sale or sold in connection with the Franchised Restaurant or which are sold under any of the Marks.

8.3       Delivery and Catering. Franchisee must comply with Noodles Development's standards before: (a) offering or providing delivery, whether for a fee or not, of any food item, food product, beverage, or other item offered for sale in connection with the Franchised Restaurant; or (b) offering or providing catering services in connection with the Franchised Restaurant. Noodles Development reserves the right, in its sole discretion, to establish the boundary for delivery or catering services to be offered from the Franchised Restaurant.

8.4       Approved Suppliers and Distributors. Noodles Development will provide Franchisee with a written list of approved suppliers and distributors and Franchisee will purchase from suppliers and distributors approved in writing by Noodles Development those food, food items, beverages, recipe ingredients, goods, products, merchandise, supplies, sundries, uniforms, machinery, signs, furniture, fixtures, equipment and services ("Approved Products and Services") designated in writing by Noodles Development which are to be used or sold by Franchisee and which Noodles Development determines must meet the standards of quality and uniformity required to protect the valuable goodwill and uniformity symbolized by and associated with the Marks and the System and/or to protect the health and safety of Franchisee's employees, customers and guests.

8.5       Approval of Suppliers. Franchisee will have the right and option to purchase the Approved Products and Services specified by Noodles Development pursuant to Section 8.4 from other or outside suppliers and distributors provided that these products and services conform in quality to the standards and specifications of Noodles Development and provided that Noodles Development determines that the supplier's or distributor's business reputation, quality standards, delivery performance, credit rating, and other factors specified by Noodles Development are satisfactory. If Franchisee desires to purchase any products or services from other suppliers and distributors, then Franchisee must, at its expense, submit samples and specifications, and other business and product information as requested, to Noodles Development for review and/or product testing to determine whether the supplier or distributor and its products and services are satisfactory to Noodles Development and comply with Noodles Development standards and specifications. Noodles Development will also have the right to inspect the facilities of the proposed supplier or distributor. The written approval of Noodles Development must be obtained by Franchisee before any previously unapproved products and services are sold by or used by Franchisee or any previously unapproved supplier or distributor is used by Franchisee.

8.6       Designated Suppliers. Franchisee will purchase from designated suppliers those proprietary sauces, seasonings, spices and other food items and recipe ingredients, designated in writing by Noodles Development which are to be used or sold by Franchisee and which Noodles Development determines must meet the standards of quality and uniformity required to protect the valuable goodwill and uniformity symbolized by and associated with the Marks and the System.

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8.7 Branding of Products. Franchisee will not under any circumstances have the right to; (a) use or display the Marks on or in connection with any product or service other than those food items, products and services prescribed or approved by Noodles Development; (b) acquire, develop or manufacture any product using the name Oodles the Art of Fresh or any of the other Marks, or direct any other person or entity to do so; (c) acquire, develop or manufacture any product that has been developed or manufactured by or for Noodles Development for use in the System and which is sold under any of the Marks, or direct any other person or entity to do so; and (d) use, have access to, or have any rights to any proprietary formulas, ingredients, or recipes for any product created by or at the direction of Noodles Development and sold under the name Oodles the Art of Fresh or any of the Marks.

9.        CONFIDENTIAL OPERATIONS MANUAL AND OTHER CONFIDENTIAL

INFORMATION

9.1 Compliance with Operations Manual. Noodles Development will loan Franchisee one copy of its operations manual ("Operations Manual") which may be in print, on an access code-protected company intranet or extranet, a CD Rom, or through other media. Noodles Development reserves the right to require Franchisee to use the Operations Manual in only an electronic form. To protect the reputation and goodwill associated with the Marks and the System and to maintain standards of operation, Franchisee will conform to the common image and identity created by the food items, beverages, products, recipes, ingredients, cooking techniques and processes, cleanliness, sanitation and services associated with the Franchised Restaurant which are portrayed and described by the Operations Manual. Franchisee will modify the operations of the Franchised Restaurant to implement all changes, additions and supplements made by Noodles Development to the System which are reflected by the Operations Manual as promptly as reasonably possible. Franchisee will implement all operational changes to the System deemed necessary by Noodles Development, in Noodles Development's sole discretion, to: (a) improve the standards of service or the food items, beverages, and products offered for sale under the System; (b) protect the goodwill associated with the Marks; (c) improve the operation of the Franchised Restaurant; or (d) protect the health and safety of Franchisee's employees, customers or guests. Noodles Development reserves the right to revise the Operations Manual at any time during the Initial Term of this Agreement and any Interim Period in any form of written communication to Franchisee, including, without limitation, by letter, newsletter, memorandum or facsimile. The Operations Manual and all supplements, changes and additions to the Operations Manual are and will be deemed confidential in all respects, and are and will remain the sole and exclusive property of Noodles Development. Franchisee will not use the Operations Manual or any information contained therein in connection with the operation of any other business or for any purpose other than in conjunction with the operation of the Franchised Restaurant. Franchisee acknowledges having received one copy of the Operations Manual on loan from Noodles Development. The Operations Manual will at all times remain the property of Noodles Development, and Franchisee shall immediately return the Operations Manual to Noodles Development upon expiration, termination, or transfer of this Agreement. In the event the Operations Manual is lost, stolen, or destroyed, Franchisee shall pay Noodles Development a replacement fee of five hundred dollars ($500) before Noodles Development delivers a new Operations Manual to Franchisee.

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9.2       Confidentiality of Operations Manual. Franchisee will at all times during the Initial Term of this Agreement and thereafter treat the Operations Manual and any other manuals, materials or information created for or approved for use in the operation of the Franchised Restaurant as secret and confidential, and Franchisee will use all reasonable means to keep this information secret and confidential including, without limitation, limiting access of the Operations Manual to Franchisee's employees and agents on a need-to-know basis. Neither Franchisee nor any employees of Franchisee will make any copy, duplication, record or reproduction of the Operations Manual, or any portion thereof, available to any unauthorized person.

9.3       Revisions to Operations Manual. Noodles Development may occasionally revise the Operations Manual, in the sole discretion of Noodles Development, and Franchisee expressly agrees to operate its Franchised Restaurant in accordance with all revisions at Franchisee's sole expense. Franchisee will at all times keep its copy of the Operations Manual current and up-to-date, and in the event of any dispute regarding the Operations Manual, the terms of the master copy of the Operations Manual maintained by Noodles Development will be controlling in all respects.

9.4       Confidentiality of Other Information. Noodles Development and Franchisee expressly understand and agree that Noodles Development will be disclosing and providing to Franchisee certain confidential and proprietary information concerning the System and the procedures, operations, technology and data used in connection with the System. Franchisee will not, during the Initial Term of this Agreement or thereafter, communicate, divulge or use for the benefit of any other person or entity any confidential and proprietary information, knowledge or know-how concerning the methods of operation of the Franchised Restaurant which may be communicated to Franchisee, or of which Franchisee may be apprised by virtue of this Agreement. Franchisee will divulge the confidential and proprietary information only to its employees who must have access to it in order to operate the Franchised Restaurant. Any and all information, knowledge and know-how including, without limitation, drawings, materials, equipment, technology, methods, procedures, techniques, recipes, specifications, computer programs, systems and other data which Noodles Development copyrights or designates as confidential or proprietary will be deemed confidential and proprietary for the purposes of this Agreement.

10. SITE SELECTION; CONSTRUCTION COSTS; BUSINESS PREMISES SPECIFICATIONS

10.1      Site Selection. Franchisee will be solely responsible for selecting the site of the Franchised Location for the Franchised Restaurant, regardless of whether the Franchised Location is owned or leased by Franchisee. Accordingly, no provision in this Agreement will be construed or interpreted to impose any obligation upon Noodles Development to locate a site for the Franchised Location, to assist Franchisee in the selection of a suitable site for the Franchised Location, or to provide any assistance to Franchisee in the purchase or lease of the Franchised Location.

10.2     Site Selection Criteria. Franchisee will not lease, purchase or otherwise acquire a site for the Franchised Location until the information as Noodles Development may require

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regarding the proposed site has been provided to Noodles Development by Franchisee and until such time as Noodles Development has provided written approval of the site for the Franchised Location. Noodles Development's failure to provide Franchisee with written approval of the proposed Franchised Location within thirty (30) days of submission of all information required by Noodles Development shall be deemed a disapproval. Noodles Development may require Franchisee to provide site information relating to, among other things, accessibility, visibility, potential traffic flows, population trends, household income and financial statistics, lease terms and other demographic information. The review of the site conducted by Noodles Development will not be deemed to be a warranty, representation or guaranty by Noodles Development that if the Franchised Restaurant is opened and operated at that site, it will be a financial success.

10.3      Restaurant Plans. Franchisee will, at its expense, provide Noodles Development all preliminary plans and final build-out specifications (including all charges and modifications) for final approval by Noodles Development. Noodles Development's failure to provide Franchisee with written approval of any preliminary or final build-out plans within thirty (30) days of submission shall be deemed a disapproval. Franchisee will, at its cost, retain a licensed architect reasonably acceptable to Noodles Development and will be responsible for the preparation of working drawings and construction plans and architectural plans and specifications for the Franchised Restaurant. Franchisee will be responsible for the accuracy of the drawings, plans and specifications.

10.4     Construction and Remodeling Costs. Franchisee will, at its expense, be solely responsible for all costs and expenses incurred for the construction, renovation or Remodeling of the Franchised Restaurant at the Franchised Location including, but not limited to, all costs for architectural plans and specifications, all modifications to the floor plans and layouts necessitated by the structure, construction or layout of the Franchised Location, building permits, site preparation, demolition, construction of the parking lot, landscaping, heating, ventilation and air conditioning, interior decorations, furniture, fixtures, equipment, leasehold improvements, labor, architectural and engineering fees, electricians, plumbers, general contractors and subcontractors.

10.5     Compliance with Specifications. The Franchised Location and the Franchised Restaurant will conform to all specifications for decor, furniture, fixtures, equipment, exterior and interior decorating designs and color schemes established by Noodles Development. Franchisee will obtain and pay for the furniture, fixtures, supplies and equipment required by Noodles Development and used by Franchisee for the operation of its Franchised Restaurant. The furniture, fixtures and equipment used in the Franchised Restaurant must be installed and located in accordance with the floor plans approved by Noodles Development, and must conform to the quality standards and uniformity requirements established by Noodles Development.

10.6     Inspection During Construction or Renovation. Franchisee will be solely responsible for inspecting the Franchised Location during construction or renovation to confirm that the Franchised Location is being constructed or renovated in a workmanlike manner and according to the specifications established by Noodles Development. Franchisee will be solely responsible for complying with all applicable local, state and federal laws, ordinances, statutes and building codes, and for acquiring all licenses and building and other permits required by all federal, state, city, municipal and local laws in connection with the construction or renovation of

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Franchisee's business premises at the Franchised Location. Noodles Development will have no responsibility to Franchisee or any other party if the Franchised Location is not constructed or renovated by Franchisee or its architect or contractor: (a) according to the standard specifications established by Noodles Development; (b) in compliance with all applicable federal, state or local laws or ordinances; or (c) in a workmanlike manner. Franchisee will not open the Franchised Restaurant for business without the prior written approval of Noodles Development.

11. SIGNS

11.1      Approved Signs. All exterior signs at the Franchised Location ("Signs") must comply with the standard sign plans and specifications established by Noodles Development. Noodles Development will provide Franchisee with a copy of the standard sign plans and specifications and Franchisee will, at its expense, prepare or cause the preparation of complete and detailed plans and specifications for the Signs and will submit the plans and specifications to Noodles Development for its written approval. Noodles Development will have the absolute right to inspect, examine, videotape and photograph the Signs for any reason at any time during the Initial Term of this Agreement or any Interim Period.

11.2     Payment of Costs and Expenses. Franchisee will, at its expense, be responsible for any and all installation costs, sign costs, architectural fees, engineering costs, construction costs, permits, licenses, repairs, maintenance, utilities, insurance, taxes, assessments and levies in connection with the construction, erection, maintenance or use of the Signs including, if applicable, all electrical work, construction of the base and foundation, relocation of power lines and all required soil preparation work. Franchisee will comply with all federal, state and local laws, regulations, building codes and ordinances relating to the construction, erection, maintenance and use of the Signs.

11.3     Modifications; Inspection. Franchisee may not alter, remove, change, modify, or redesign the Signs unless approved by Noodles Development in writing. Noodles Development will have the unequivocal and unilateral right to redesign the plans and specifications for the Signs during the Initial Term of this Agreement or any Interim Period without the approval or consent of Franchisee. Within thirty (30) days after receipt of written notice from Noodles Development, Franchisee must, at its expense, either modify or replace the Signs so that the Signs displayed at the Franchised Location will comply with the redesigned plans and specifications as issued by Noodles Development. Franchisee will not be required to modify or replace the Signs more than once every five (5) years.

11.4     Interior Signs. Franchisee will purchase and install in accordance with the written specifications of Noodles Development all interior signs specified in writing occasionally by Noodles Development for use in the Franchised Restaurant. Franchisee will not, without the prior written consent of Noodles Development, install or display any sign, menu board, poster, display or advertisement, whether functional or decorative, other than those items specified in writing by Noodles Development.

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12. TELECOMMUNICATION EQUIPMENT; POINT-OF-SALE SYSTEM; COMPUTER HARDWARE AND SOFTWARE

12.1      Telecommunication Equipment. Franchisee will, at its sole expense, obtain and maintain at all times during the Initial Term of this Agreement and any Interim Period, electronic telephone facsimile ("Fax") equipment, and other telecommunications equipment as may occasionally be required by Noodles Development for use in the operation of the Franchised Restaurant. At all times during the Initial Term of this Agreement and any Interim Period, all telecommunications and Fax equipment must be in operation to send and receive information as specified by Noodles Development.

12.2     Point-Of-Sale System. Franchisee will, at its sole expense, obtain and maintain the point-of-sale cash register required by Noodles Development for use in the operation of the Franchised Restaurant. Franchisee's point-of-sale system must at all times during the Initial Term of this Agreement and any Interim Period meet the standards and specifications established occasionally by Noodles Development.

12.3     Computer Hardware. Franchisee will, at its sole expense, purchase the computer hardware and peripherals including printers, monitors, modems and networking equipment ("Computer Equipment") that will serve as, or integrate with, Franchisee's point-of-sale cash register. All Computer Equipment must meet the standards and specifications established by Noodles Development and must be compatible with the software described in Section 12.4. Franchisee, at Franchisee's sole cost and expense, will update the Computer Equipment as may occasionally be required by Noodles Development, which costs and expenses are not limited or capped by Noodles Development in any way. Franchisee will purchase a maintenance agreement for on-site maintenance of Franchisee's point-of-sale cash register.

12.4     Software. Franchisee will purchase the computer software and operating system specified by Noodles Development including software for accounting and cost control, which meets the specifications described in the Operations Manual. Franchisee will, occasionally and at Franchisee's own cost and expense, update the computer software to meet the then-current standards and specifications issued by Noodles Development, which costs and expenses are not limited or capped by Noodles Development in any way.

12.5     Internet Provider. Franchisee will, at all times during the Initial Term of this Agreement and any Interim Period, at Franchisee's expense, have access to the Internet through the Microsoft Network, America On-Line, Prodigy, CompuServe or other Internet access provider designated or approved by Noodles Development.

12.6     E-Mail Address. Franchisee will, at all times during the Initial Term of this Agreement and any Interim Period, maintain an e-mail address on the Internet. Franchisee's e-mail address will be provided to Noodles Development and will be used as a method for Franchisee and Noodles Development to communicate with each other and to transmit documents and other information. Franchisee will not use the words "Oodles the Art of Fresh " as any part of its e-mail address or its domain name if a Home Page is maintained by Franchisee on the Internet. Franchisee will review its e-mail at least once a day and will respond to all e-

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The original documents were scanned as an image. The original file can be downloaded at the link above.