What is a required action a Noodles & Company franchisee must take to be eligible for indemnification in the event of a trademark infringement claim?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding anything to the contrary in this Agreement, in the event that Noodles & Company's insurance does not cover either the costs of defense or
attorney's fees, or any portion of them, or damages, liability or settlement amounts, or any portion of them, associated with any Indemnified Claim or other claim for which Area Operator is otherwise entitled to indemnification, Noodles & Company is not obligated to indemnify Area Operator to the extent that Noodles & Company's insurance does not provide coverage. Furthermore, Noodles & Company's obligation to indemnify, defend or pay for damages of any claim for which Area Operator would otherwise be entitled to indemnification arises only if and to the extent that Area Operator's insurance coverage does not or would not (absent any right to indemnification by Noodles & Company) provide coverage for such claims. In the event that Area Operator has failed to obtain and keep in force all policies that it is obligated to carry under the terms of its agreements with Noodles & Company and one or more of such policies would or could have provided coverage for the claim, then Noodles & Company is not obligated to indemnify, defend or pay damages, settlements, or have any liability for such claim.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, a Noodles & Company franchisee's eligibility for indemnification is contingent on maintaining the insurance coverage required by their agreements with Noodles & Company. Specifically, if a franchisee fails to secure and maintain all required insurance policies, and one or more of those policies could have covered the claim, Noodles & Company is not obligated to provide indemnification, defense, or payment for damages, settlements, or any other liability related to the claim. This condition applies regardless of whether the claim is an Indemnified Claim or another claim for which the Area Operator would otherwise be entitled to indemnification.
This stipulation places a significant responsibility on the franchisee to ensure they have adequate and compliant insurance coverage. It's not merely about having insurance, but about having the right insurance, as defined by the franchise agreement. A prospective franchisee must carefully review the insurance requirements outlined in their agreements with Noodles & Company to understand the types and amounts of coverage needed.
The franchisee should also be aware that Noodles & Company is only obligated to indemnify, defend, or pay for damages to the extent that the franchisee's insurance coverage does not or would not provide coverage for such claims, absent any right to indemnification by Noodles & Company. This means that the franchisee's insurance is the primary source of coverage, and Noodles & Company's indemnification is secondary, kicking in only when the franchisee's insurance is insufficient.
In practical terms, a Noodles & Company franchisee needs to meticulously manage their insurance policies, ensuring they meet all the franchisor's requirements. Failure to do so could leave them financially exposed in the event of a claim, as Noodles & Company is not obligated to step in if the franchisee's insurance is lacking. This highlights the importance of a thorough understanding of the franchise agreement and close communication with insurance providers to maintain appropriate coverage.