For Noodles & Company, what is the purpose of the 'Initial Claim Notice' mentioned in the context of indemnification?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
- (iv) Initial Claim Notice. When a Party becomes aware of a situation which may result in Damages for which it would be entitled to be indemnified hereunder, such Party (the "Indemnitee") shall submit a written notice (the "Initial Claim Notice") to the other Party or Parties (the "Indemnitor") to such effect within thirty (30) days after it first becomes aware of such matter and shall furnish the Indemnitor with such information as it has available demonstrating its right or possible right to receive indemnity.
If the potential claim is predicated on, or later results in, the filing by a third party of any action at law or in equity (a "Third Party Claim"), the Indemnitee shall provide the Indemnitor with a supplemental Initial Claim Notice not later than ten (10) days prior to the date on which a responsive pleading must be filed, and shall also furnish a copy of such claim (if made in writing) and of all documents
received from the third party in support of such claim. Every Initial Claim Notice shall, if feasible, contain a reasonable estimate by the Indemnitee of the losses, costs, liabilities and expenses (including, but not limited to, costs and expenses of litigation and attorneys' fees) which the Indemnitee may incur. In addition, each Initial Claim Notice shall name, when known, the person or persons making the assertions which are the basis for such claim. Failure by the Indemnitee to deliver an Initial Claim Notice or an update thereof in a timely manner shall not relieve the Indemnitor of any of its obligations under this Agreement except to the extent that actual monetary prejudice to the Indemnitor can be demonstrated, including, without limitation, prejudice due to failure to provide notice to applicable insurers.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, the Initial Claim Notice serves as a formal communication from a party seeking indemnification (the Indemnitee) to the party potentially responsible for providing it (the Indemnitor). This notice is triggered when the Indemnitee becomes aware of a situation that could lead to damages for which they are entitled to be indemnified. The Indemnitee must send a written Initial Claim Notice to the Indemnitor within thirty days of becoming aware of the potential issue, including available information that demonstrates the right to receive indemnity.
If the potential claim involves a third party filing a legal action, the Indemnitee must provide a supplemental Initial Claim Notice to the Indemnitor at least ten days before a responsive pleading is due. This supplemental notice should include a copy of the claim and all supporting documents received from the third party. The Initial Claim Notice should also include a reasonable estimate of potential losses, costs, liabilities, and expenses, including litigation costs and attorney's fees, if feasible, as well as the names of the individuals making the assertions that form the basis of the claim, if known.
Failure to provide the Initial Claim Notice or updates in a timely manner does not automatically relieve the Indemnitor of their obligations, but it may do so to the extent that the Indemnitor can demonstrate actual monetary prejudice, such as a failure to notify applicable insurers. This process ensures that Noodles & Company is promptly informed of potential liabilities, allowing them to take appropriate action and potentially mitigate damages. For a prospective franchisee, understanding and adhering to these notice requirements is crucial to ensure they can effectively seek indemnification when entitled.