Can the Seller proceed against one or less than all of the guarantors in the Noodles & Company agreement?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
- 1.a Buyer and Guarantor, jointly and severally, represent and warrant to Seller (each of which shall be deemed material and independently relied upon by Seller) as follows:
- (i) Buyer and each entity comprising Buyer, if applicable, is duly organized, validly existing and in good standing under the laws of the state of its organization with full power and authority to own its properties and assets and to conduct its business as now conducted or proposed to be conducted.
- (ii) Buyer has the full power and authority to enter into and perform this Agreement and to consummate the transactions contemplated by this Agreement in accordance with the terms of this Agreement.
- (iii) Buyer has taken all necessary corporate actions to authorize and approve the execution, delivery and performance of this Agreement and the transactions contemplated by this Agreement. This Agreement constitutes a legal, valid and binding obligation of Buyer and Guarantor enforceable against Buyer and Guarantor in accordance with its terms.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, the Buyer and Guarantor are jointly and severally responsible to the Seller. This means that each guarantor is individually liable for the full debt or obligation, as well as being jointly liable with the other guarantors.
This "jointly and severally" clause in the Noodles & Company agreement has significant implications for franchisees, especially those involving multiple owners or investors. Noodles & Company can pursue any one guarantor for the entire amount owed, regardless of the contributions or responsibilities of the other guarantors. This could expose a single guarantor to greater financial risk if the other guarantors are unable to meet their obligations.
For a prospective Noodles & Company franchisee, it's crucial to understand the full extent of this liability before signing the agreement. Franchisees should seek legal counsel to fully understand the implications of joint and several liability and to assess the financial stability and reliability of any co-guarantors. This clause is not uncommon in franchise agreements, but its impact can be substantial, making due diligence and careful consideration essential.