What conditions must be met for Benihana to approve the transfer of a franchise?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
ent provided certain conditions are met. |
| Provision | Franchise Agreement | Summary | |
|---|---|---|---|
| m. | Conditions for Franchisor approval of transfer | Sections 11.3 – 11.6, 11.8 | (1) we have not exercised our right of first refusal; (2) you release all claims you have against us in a form we require substantially similar to Exhibit G hereto; (3) you agree to remain obligated under the non-competition and confidentiality covenants; (4) you remain liable under the Franchise Agreement; (5) you or the transferee pays us an assignment fee of $10,000; (6) the transferee meets our then-current criteria; (7) execution of an assignment agreement acceptable to us; (8) you provide copies of all documents restricting transfer as imposed by the Franchise Agreement; and (9) the transferee or |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 59–65)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, a franchisee needs to meet several conditions to get approval from Benihana for a franchise transfer. Benihana will not unreasonably withhold consent for a transfer if certain conditions are met.
These conditions include Benihana not exercising its right of first refusal to acquire the franchise. The franchisee must release all claims against Benihana in a required form, remain obligated under non-competition and confidentiality agreements, and remain liable under the Franchise Agreement.
Additionally, either the franchisee or the transferee must pay Benihana an assignment fee of $10,000. The transferee must also meet Benihana's then-current criteria for new franchisees. An assignment agreement acceptable to Benihana must be executed, and the franchisee must provide copies of all documents restricting transfer as imposed by the Franchise Agreement. Finally, the transferee or an approved manager needs to complete Benihana's initial training program to Benihana's satisfaction.