What consent is required from the Noodles & Company franchisee regarding the settlement of any Event related to the indemnification obligation?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
We may, in our reasonable discretion, take such actions as we deem necessary and appropriate to investigate, defend, or settle any Event or take other remedial or corrective actions with respect thereto as may be necessary for the protection of Indemnitees or Noodles & Company Restaurants generally, provided however, that any settlement shall be subject to your consent, which consent shall not be unreasonably withheld or delayed.
We shall not be obligated to consent to any settlement that admits any fault, directly or indirectly, on our part.
Further, notwithstanding the foregoing, if the insurer on a policy or policies obtained in compliance with your Franchise Agreement agrees to undertake the defense of an Event (an "Insured Event"), we agree not to exercise our right to select counsel to defend the Event if such would cause your insurer to deny coverage so long as your insurer provides suitable, skilled counsel to defend the action.
We reserve the right to retain counsel to represent us with respect to an Insured Event at our sole cost and expense.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to the 2025 FDD, Noodles & Company franchisees must provide consent for any settlement related to an Event for which they are providing indemnification. Specifically, Noodles & Company may take actions to investigate, defend, or settle any Event, but any settlement is subject to the franchisee's consent. This consent cannot be unreasonably withheld or delayed.
This means that while Noodles & Company has the authority to manage the legal aspects of a claim, they cannot finalize a settlement without the franchisee's agreement. This protects the franchisee from settlements that they believe are not in their best interest. However, the franchisee cannot stall the process by unreasonably withholding or delaying their consent.
Noodles & Company is not obligated to consent to any settlement that admits any fault on their part. If an insurer agrees to defend an Event under the franchisee's insurance policy, Noodles & Company will not exercise its right to select counsel if doing so would cause the insurer to deny coverage, provided the insurer offers skilled counsel for the defense. Noodles & Company retains the right to hire its own counsel for an Insured Event at its own expense.