What does the Guarantor irrevocably and unconditionally guarantee regarding the Buyer's obligations in the Noodles & Company agreement?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
proval of the foregoing business plan and of Guarantor to demonstrate its ability to fulfill its obligations under this Agreement are conditions of Seller to Closing.
- 1.j Bulk Sales Act. It will not be practicable to comply or to attempt to comply with the procedures of the bulk sales or similar laws (if any) of the state in which the Purchased Assets are located on the Closing Date. Accordingly, Seller hereby agrees to defend, indemnify and hold Buyer harmless from and against any and all costs, losses, liabilities, claims and expenses (including reasonable attorneys' fees) arising out of or resulting from the failure of Buyer or Seller to comply with or perform any actions in connection with the provisions of any such law.
- 1.k Franchise Agreements and Development Agreement. At or before Closing, Buyer, as franchisee, shall enter into Seller's current form Franchise Agreement (including any and all Addenda thereto) as set forth in the FDD for each of the Restaurants (each, a "Franchise Agreement" and collectively, the "Franchise Agreements"), each of which agreements will provide for a ____ percent (____%) royalty rate.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
Based on the 2025 Noodles & Company Franchise Disclosure Document, the Franchise Agreements that the Buyer (franchisee) enters into will each have a corresponding guarantee issued by a Guarantor. The guarantee will be in substantially the form attached to the FDD, and these guarantees are collectively referred to as the "Franchise Agreement Guarantees."
In essence, the Guarantor is guaranteeing that the Buyer will fulfill all of its obligations under the Franchise Agreement. This is a common practice in franchising, especially when the franchisee is a corporate entity or has limited operating history. The Guarantor, who is often a principal of the franchisee, provides an additional layer of security for Noodles & Company, ensuring that there is a responsible party who can be held accountable if the franchisee fails to meet its financial or operational responsibilities.
A prospective Noodles & Company franchisee should carefully review the form of Franchise Agreement Guarantee attached to the FDD to fully understand the scope of the Guarantor's obligations. It is important to understand what assets or personal guarantees the guarantor is putting at risk. Franchisees should seek legal counsel to fully understand the implications of the guarantee before signing the Franchise Agreement.