What assignment fee must be paid to Benihana for consent to a Third-Party Disposition of a Controlling Ownership Interest?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
ve (45) days from BNC's acceptance.
- 11.5.4 If BNC waives its right of first refusal, BNC will, within fifteen (15) days after the expiration of the thirty-day period set forth in Subsection 11.5.2 above, advise Franchisee whether BNC consents to the Third-Party Disposition. If BNC consents to the Third-Party Disposition, then Franchisee may conclude the sale to the Proposed Transferee on the terms and conditions of the written agreement submitted to BNC.
- 11.5.5 A change of any material terms of an agreement for a Third-Party Disposition, including but not limited to price, payment terms, interest being transferred by Franchisee, or the identity of the Proposed Transferee or any holder of any Ownership Interest in the Proposed Transferee, is deemed a new offer, subject to BNC's right of first refusal contained herein.
- 11.6 BNC agrees not to unreasonably withhold its consent to any Third-Party Disposition of a Controlling Ownership Interest provided: (a) BNC has not exercised its right of first refusal granted under Section 11.5; (b) all of Franchisee's monetary obligations to BNC have been satisfied in full; (c) Franchisee releases all claims it may have against BNC and agrees to remain obligated under the non-competition and non-disclosure of confidential information covenants in this Agreement; (d) Franchisee expressly agrees to remain primarily liable under this Agreement for three (3) years after the Third-Party Disposition; (e) BNC is paid an assignment fee of $10,000; and (e) the Proposed Transferee: (i) is of good moral ch
Source: Item 23 — Receipts (FDD pages 74–576)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, a franchisee must pay an assignment fee of $10,000 to Benihana if they seek to transfer a controlling ownership interest to a third party. This fee is one of several conditions that must be met for Benihana to approve the transfer.
Other conditions include Benihana not exercising its right of first refusal, the franchisee satisfying all monetary obligations to Benihana, and the franchisee releasing all claims against Benihana while remaining obligated under non-competition and non-disclosure agreements. The franchisee must also agree to remain primarily liable under the Franchise Agreement for three years after the transfer.
Furthermore, the proposed transferee must meet Benihana's criteria for new franchisees, including demonstrating good moral character and reputation, completing required training, and executing a written agreement assuming all of the franchisee's obligations. The transferee must also provide personal guarantees and have a General Manager who has completed Benihana's training program. Relevant corporate or partnership documents must also be provided to Benihana.
Benihana retains the right to refuse consent to the transfer if all conditions are not met to its satisfaction. This comprehensive set of requirements ensures that any transfer of ownership maintains the standards and obligations of the Benihana franchise system.