Does Benihana have to approve a lease agreement before a franchisee signs it?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
lease. BNC may, however, require that Franchisee's lease include certain provisions, including, but not limited to:
- (a) a requirement that Franchisee and Franchisee's landlord sign and deliver to BNC a collateral assignment to BNC of Franchisee's leasehold rights under in the form attached to this Agreement as Exhibit D, under which, upon termination or expiration of this Agreement, at BNC's option, all of Franchisee's rights under the lease will be assigned to BNC or its designee;
- (b) a provision restricting the use of the premises solely to the operation of a BENIHANA Restaurant;
- (c) a provision prohibiting Franchisee, without BNC's prior written consent, from subleasing or assigning any of Franchisee's occupancy rights or renewing or otherwise extending the lease term;
- (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 give BNC written notice of Franchisee's defaults by Franchisee simultaneously with the issuance of any default notice sent to Franchisee.
Source: Item 23 — Receipts (FDD pages 74–576)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, Benihana does not have to approve a lease agreement before a franchisee signs it. However, Benihana may require that the franchisee's lease include certain provisions.
These provisions may include a collateral assignment to Benihana of the franchisee's leasehold rights, restricting the use of the premises solely to the operation of a Benihana Restaurant, prohibiting the franchisee from subleasing or assigning any occupancy rights or renewing/extending the lease term without Benihana's prior written consent, granting Benihana the right to enter the premises for modifications or to cure any default under the agreement, and requiring the landlord to provide Benihana with written notice of the franchisee's defaults.
Furthermore, the franchisee must construct the restaurant at a location approved by Benihana under its site selection processes and cannot relocate without prior written consent. If the franchisee hasn't secured an approved location by the effective date, Benihana may assist in identifying a site, but the franchisee makes the final decision. Benihana's approval of the location does not guarantee the restaurant's profitability or success.