Does Benihana have to approve a franchisee's lease agreement before it is signed?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
- 2.2 Franchisee shall acquire or lease the Location at Franchisee's expense. If Franchisee leases the Location, Franchisee must obtain BNC's prior written approval before entering into a lease agreement. Franchisee shall provide BNC with a copy of Franchisee's fully executed lease agreement immediately after signing. BNC is not required and has no obligation to negotiate the terms of Franchisee's lease. BNC
may require the inclusion of certain provisions in the lease, including, but not limited to:
(a) The requirement that Franchisee and Franchisee's landlord execute and deliver to BNC a collateral assignment of Franchisee's rights under the lease in the form attached to this Agreement as Exhibit D, pursuant to which Franchisee must, at BNC's option, assign all of Franchisee's rights under the lease to BNC or its designee upon termination or expiration of this Agreement.
(b) A provision which restricts the use of the premises solely to the operation of a BENIHANA Restaurant.
(c) A provision which prohibits Franchisee from subleasing or assigning all or any part of Franchisee's occupancy rights, or extending the term of or renewing the lease, without BNC's prior written consent.
(d) A provision giving BNC the right to enter the premises to make modifications necessary to protect the Marks or the BENIHANA System, or to cure any default under this Agreement.
(e) A provision requiring the landlord to provide BNC with written notice of any defaults by Franchisee under the lease simultaneously with the issuance of any such notices to Franchisee.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, if a franchisee chooses to lease the location for their Benihana restaurant, they must obtain prior written approval from Benihana National Corp. (BNC) before entering into any lease agreement. After signing the lease, the franchisee must provide BNC with a copy of the fully executed lease agreement immediately.
Benihana does not have any obligation to negotiate the terms of the lease for the franchisee. However, Benihana may require that certain provisions be included in the lease agreement. These provisions may include a collateral assignment of the franchisee's rights under the lease to BNC, a restriction on the use of the premises solely to the operation of a Benihana Restaurant, and a prohibition against subleasing or assigning occupancy rights without BNC's prior written consent.
Additional provisions that Benihana may require include granting Benihana the right to enter the premises for modifications to protect their marks or the Benihana System, or to cure any default under the agreement. The lease may also require the landlord to provide Benihana with written notice of any defaults by the franchisee under the lease, simultaneously with the issuance of such notices to the franchisee. This level of oversight is common in franchising to protect brand standards and ensure consistency across all locations.