Under what circumstances does the indemnification agreement NOT apply to liability arising from the negligent acts of Indemnitees related to a Noodles & Company restaurant?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
5.02 Indemnification. You agree to indemnify us, our Affiliates and our respective directors, officers, employees, shareholders, agents, successors, and assigns (collectively "Indemnitees"), and to hold the Indemnitees harmless to the fullest extent permitted by law, from any and all losses and expenses (as defined below) incurred in connection with any litigation or other form of adjudicatory procedure, claim, demand, investigation, formal or informal inquiry (regardless of whether it is reduced to judgment) or any settlement thereof which arises directly or indirectly from, or as a result of, a claim of a third party against any one or more of the Indemnitees in connection with the development, ownership, operation or closing of any of your Noodles & Company restaurants (collectively "Event"), and regardless of whether it resulted from any strict or vicarious liability imposed by law on the Indemnitees, provided, however, that this indemnity will not apply to any liability arising from the negligent acts of Indemnitees (except to the extent that joint liability is involved, in which event the indemnification provided herein will extend to any finding of comparative or contributory negligence attributable to you). The term "losses and expenses" includes compensatory, exemplary, and punitive damages; fines and penalties; attorneys' fees; experts' fees; court costs; costs associated with investigating and defending against claims; settlement amounts; judgments; compensation for damages to our reputation and goodwill; and all other costs associated with any of the foregoing losses and expenses. We agree to give you reasonable notice of any Event of which we become aware for which indemnification may be required and we may elect (but are not obligated) to direct the defense thereof,
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, the indemnification agreement does not apply to liability arising from the negligent acts of the Indemnitees, except when joint liability is involved. Indemnitees include Noodles & Company, its Affiliates, and their respective directors, officers, employees, shareholders, agents, successors, and assigns.
In cases of joint liability, where the franchisee's negligence contributes to the liability, the indemnification extends to cover comparative or contributory negligence attributable to the franchisee. This means that if a third party makes a claim against Noodles & Company and it is found that both Noodles & Company's negligence and the franchisee's negligence contributed to the damages, the franchisee will have to indemnify Noodles & Company for the portion of the liability attributed to the franchisee's negligence.
This clause is important for prospective franchisees to understand, as it clarifies the extent to which they are responsible for covering Noodles & Company's losses and expenses. The franchisee is responsible for losses and expenses incurred due to third-party claims arising from the development, ownership, operation, or closing of their Noodles & Company restaurant. However, the franchisee is not responsible for covering Noodles & Company's own negligence unless the franchisee's negligence also contributed to the claim.