What is the franchisee's obligation regarding indemnifying Noodles & Company and its affiliates against third-party claims?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
5.02 Indemnification. You agree to indemnify us, our Affiliates and our respective directors, officers, employees, shareholders, agents, successors, and assigns (collectively "Indemnitees"), and to hold the Indemnitees harmless to the fullest extent permitted by law, from any and all losses and expenses (as defined below) incurred in connection with any litigation or other form of adjudicatory procedure, claim, demand, investigation, formal or informal inquiry (regardless of whether it is reduced to judgment) or any settlement thereof which arises directly or indirectly from, or as a result of, a claim of a third party against any one or more of the Indemnitees in connection with the development, ownership, operation or closing of any of your Noodles & Company restaurants (collectively "Event"), and regardless of whether it resulted from any strict or vicarious liability imposed by law on the Indemnitees, provided, however, that this indemnity will not apply to any liability arising from the negligent acts of Indemnitees (except to the extent that joint liability is involved, in which event the indemnification provided herein will extend to any finding of comparative or contributory negligence attributable to you). The term "losses and expenses" includes compensatory, exemplary, and punitive damages; fines and penalties; attorneys' fees; experts' fees; court costs; costs associated with investigating and defending against claims; settlement amounts; judgments; compensation for damages to our reputation and goodwill; and all other costs associated with any of the foregoing losses and expenses. We agree to give you reasonable notice of any Event of which we become aware for which indemnification may be required and we may elect (but are not obligated) to direct the defense thereof,
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, franchisees have an obligation to indemnify Noodles & Company and its affiliates against third-party claims. Specifically, the franchisee must indemnify Noodles & Company, its affiliates, and their respective directors, officers, employees, shareholders, agents, successors, and assigns (collectively "Indemnitees") and hold them harmless to the fullest extent permitted by law. This indemnification covers losses and expenses incurred due to any litigation, claim, demand, investigation, or inquiry arising directly or indirectly from a third-party claim related to the development, ownership, operation, or closing of the franchisee's Noodles & Company restaurant. This obligation applies regardless of whether the liability arises from strict or vicarious liability imposed by law on the Indemnitees.
The term "losses and expenses" is broadly defined and includes compensatory, exemplary, and punitive damages; fines and penalties; attorneys' fees; experts' fees; court costs; costs associated with investigating and defending against claims; settlement amounts; judgments; and compensation for damages to Noodles & Company's reputation and goodwill. However, the franchisee's indemnification obligation does not extend to liability arising from the negligent acts of the Indemnitees, unless joint liability is involved, in which case the indemnification will cover comparative or contributory negligence attributable to the franchisee.
Noodles & Company agrees to provide the franchisee with reasonable notice of any event that may require indemnification and may elect to direct the defense of such claims, although they are not obligated to do so. The franchisee's consent is required for the selection of counsel, but such consent cannot be unreasonably withheld or delayed. This indemnification clause is a standard practice in franchising, designed to protect the franchisor from liabilities arising from the franchisee's operation of the business, but it's important for the franchisee to understand the scope of this obligation and to ensure adequate insurance coverage.