Under what circumstances is the seller obligated to cover losses related to misrepresentation in the Noodles & Company agreement?

According to the 2025 Noodles & Company Franchise Disclosure Document, the agreement does not disclaim any representation made in the FDD. This means that Noodles & Company acknowledges the importance of the representations made within the FDD and does not attempt to avoid responsibility for them through the franchise agreement.

However, Noodles & Company's obligation to indemnify an Area Operator is contingent upon certain conditions related to insurance coverage. Specifically, Noodles & Company is not obligated to provide indemnification if its own insurance does not cover the costs of defense, attorney's fees, damages, liability, or settlement amounts associated with a claim. Furthermore, Noodles & Company's obligation to indemnify arises only if the Area Operator's insurance coverage does not or would not provide coverage for such claims, assuming the Area Operator had obtained and maintained all required insurance policies.

In cases where an Area Operator has failed to maintain the required insurance policies, and those policies could have provided coverage for the claim, Noodles & Company is not obligated to indemnify, defend, or pay damages or settlements. This places a significant responsibility on the franchisee to ensure they maintain adequate and appropriate insurance coverage as stipulated in their agreements with Noodles & Company, as failure to do so could leave them without franchisor support in the event of a claim.