Is all-risk building and contents insurance, including fire, flood, earthquake, vandalism, and theft, required for a Benihana restaurant, and if so, what valuation basis must be used?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
nchise Agreement is terminated.
Insurance
Before you open your BENIHANA Restaurant, you must obtain the insurance coverage we require. Our current insurance requirements are described below. We may modify our insurance requirements during the term of your Franchise Agreement, and any modifications will be communicated to you in our Manual or otherwise in writing. You must comply with any changes we require. This insurance coverage must be maintained during the term of the Franchise Agreement and must be obtained from a responsible, duly licensed carrier or carriers acceptable to us. All insurance must be on an "occurrence" basis. The required insurance is:
- (a) comprehensive general liability insurance (with products, completed operations and contractual liability and independent contractors and escalators coverage) and comprehensive motor vehicle insurance (for owned and non-owned vehicles) against claims for bodily and personal injury, death and property damage caused by or occurring in conjunction with the operation of the Restaurant (or otherwise in conjunction with your conduct of business) under one or more policies of insurance, each on an occurrence basis, with single-limit coverage for personal and bodily injury, death and property damage of at least $5,000,000;
- (b) All-risk building and contents insurance including fire, flood and earthquake, vandalism and theft insurance for the replacement value of the Restaurant and its contents;
- (c) business interruption insurance for a period adequate to reestablish normal business operations;
- (d) builders' risk insurance on a completed value non-reporting basis during the period of any remodeling of the Restaurant; and
- (e) workers' compensation insurance in such amount as may be required by applicable statute or rule.
All liability insurance policies must name us, and any of our affiliates that we specify, and our respective officers, directors, shareholders, partners, agents, representatives, independent contractors, servants and employees of each of them, as additional named insureds and must include a waiver o
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 28–33)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, franchisees are required to obtain all-risk building and contents insurance, including coverage for fire, flood, earthquake, vandalism, and theft. This insurance must cover the replacement value of the restaurant and its contents.
In addition to all-risk building and contents insurance, Benihana franchisees must also maintain comprehensive general liability insurance with a single-limit coverage of at least $5,000,000 for personal and bodily injury, death, and property damage. They also need business interruption insurance adequate to reestablish normal business operations, builders' risk insurance during any remodeling, and workers' compensation insurance as required by law.
All liability insurance policies must name Benihana, its affiliates, and their respective officers, directors, shareholders, partners, agents, representatives, independent contractors, servants, and employees as additional named insureds. The policies must also include a waiver of subrogation in favor of all these parties. Franchisees must secure this insurance coverage before opening their Benihana restaurant and maintain it throughout the term of the Franchise Agreement, using a responsible and duly licensed carrier acceptable to Benihana. The insurance must be on an "occurrence" basis, meaning it covers incidents that occur during the policy term, regardless of when a claim is filed.