Does Noodles & Company require a personal guaranty from principal owners, and if so, where is it located in the agreement?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
FOR THE SITE LOCATED AT: In consideration of, and as an inducement to, the execution of the Noodles & Company Franchise Agreement dated as of , (the "Agreement") by and between Noodles & Company ("Franchisor"), and ("Franchisee"), each of amendments). the undersigned owners of a 10% or greater interest in Franchisee hereby personally, unconditionally and irrevocably: (1) guarantees to Franchisor and its successors and assigns, for the term of the Agreement and thereafter as provided in the Agreement, that Franchisee shall timely perform each and every undertaking, agreement and covenant set forth in the Agreement (and any amendments), including the timely performance of all financial obligations, and that each and every representation of Franchisee made in connection with the Agreement (and any amendments) are true, correct and complete in all respects at and as of the time given; and (2) agrees personally to be bound by, and personally liable for the breach of, each and every provision in the Agreement (and any Notwithstanding the foregoing, the undersigned shall have no obligation under Section 7.02 or 7.03 of the Franchise Agreement after the second anniversary of the later of (a) the date of the undersigned ceases to have an ownership interest in Franchisee or (b) the date of undersigned ceases to render services to the Franchisee. Each of the undersigned waives: (a) acceptance and notice of acceptance by Franchisor of the foregoing undertakings; (b) notice of demand for payment of any indebtedness or non-performance of any obligations hereby guaranteed; (c) protest and notice of default to any party with respect to the indebtedness or nonperformance of any obligations hereby guaranteed; (d) any right he or she may have to require that an action be brought against Franchisee or any other person as a condition of liability; (e) notice of any amendment to the agreement; and (f) any and all other notices and legal or equitable defenses to which he or she may be entitled.
Source: Item 22 — CONTRACTS (FDD pages 98–99)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, principal owners with a 10% or greater interest in the franchisee are required to provide a personal guaranty. This guaranty ensures that the franchisee will perform all obligations under the Franchise Agreement, including financial obligations, and that all representations made by the franchisee are accurate. This requirement is detailed in the document under the section titled "PRINCIPAL OWNERS' PERSONAL GUARANTY OF FRANCHISEE'S OBLIGATIONS."
The personal guaranty means that the principal owners are personally liable for any breaches of the Franchise Agreement. This includes the timely performance of all financial obligations. The owners also agree to be bound by and personally liable for any breaches of the agreement's provisions. However, the obligation under Section 7.02 or 7.03 of the Franchise Agreement is lifted after the second anniversary of when the owner ceases to have an ownership interest or stops providing services to the franchisee.
The guaranty includes a waiver of several rights, such as the right to receive notice of acceptance of the guaranty, notice of demand for payment, and the right to require that action be taken against the franchisee before pursuing the guarantor. This comprehensive waiver underscores the seriousness of the personal guarantee and the extent of the personal liability assumed by the principal owners. Prospective franchisees should carefully review this section with their legal advisors to fully understand the implications of providing a personal guaranty to Noodles & Company.