Under what circumstances is the seller liable for losses related to misrepresentation, breach, or nonperformance of representations made in the Noodles & Company agreement?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
ion, are entitled to prosecute, defend and/or settle any proceeding arising out of your use of any Mark pursuant to this Agreement, and, if we, or our applicable Affiliate, undertake to prosecute, defend and/or settle any such matter, we have no obligation to indemnify or reimburse you for any fees or disbursements of any legal counsel retained by you. If we choose not to defend you and it is ultimately determined that you were entitled to a defense under this provision, we agree to pay reasonable legal fees at a maximum per hour rate at which your insurance carrier or our insurance carrier (whichever is less) would pay for a similar claim under your or our applicable policy.
- (b) We agree to indemnify you against, and to reimburse you for, all damages for which you are held liable in any proceeding arising out of any claim made against you as a result of your having properly utilized the then current (i) point of sale marketing materials provided to you by Noodles & Company or those developed by Noodles & Company and (ii) the recipes and required ingredients ("Indemnified Claim"); however, under no circumstances does Indemnified Claim include any claim resulting from, based on, or related to, a food borne illness, foreign or other object in the food that was not prescribed in the recipe or intended to be in the dish; allergic reactions of any kind; verbal information provided to customers; slip and fall and such other personal injuries or accidents. We, and our applicable Affiliate, at our respective sole discretion, are entitled to prosecute, defend and/or settle any proceeding arising out such an Indemnified Claim, and, if we, or our applicable Affiliate, undertake to prosecute, defend and/or settle any such matter, we have no obligation to indemnify or reimburse you for any fees or disbursements of any legal counsel retained by you. If we choose not to defend you and it is ultimately determined that you were entitled to a defense under this provision, we agree to pay reasonable legal fees at a maximum per hour rate at which your insurance carrier or our insurance carrier (whichever is less) would pay for a similar claim under your applicable policy.
Source: Item 23 — RECEIPT (FDD pages 99–350)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, Noodles & Company agrees to indemnify franchisees against damages for which the franchisee is held liable due to claims resulting from the proper use of then-current point-of-sale marketing materials provided by Noodles & Company or those developed by Noodles & Company, as well as the recipes and required ingredients. This protection, termed an "Indemnified Claim," does not extend to claims related to foodborne illnesses, foreign objects in food not prescribed by the recipe, allergic reactions, verbal information provided to customers, or personal injuries like slip and fall accidents.
Noodles & Company, at its discretion, can manage the legal proceedings related to an Indemnified Claim, including prosecution, defense, and settlement. If Noodles & Company chooses to handle the claim, they are not obligated to cover the franchisee's legal counsel fees. However, should Noodles & Company decline to defend the franchisee and the franchisee is later found to be entitled to a defense under this provision, Noodles & Company will cover reasonable legal fees, capped at the hourly rate that either the franchisee's or Noodles & Company's insurance carrier would pay for a similar claim, whichever is less.
Furthermore, Noodles & Company has the option, but not the obligation, to manage claims against a franchisee that could negatively impact the brand or other Noodles & Company restaurants. In such cases, Noodles & Company is not required to cover the franchisee's legal costs or any settlement amounts, but they retain the right to settle and defend the claim. The FDD also states that nothing in the agreement is intended to disclaim any representation made in the FDD.