Does Benihana consider being controlled by someone on the SDN list a violation of the agreement?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
business transactions with Franchisee or Franchisee's shareholders, members or partners; (iii) wholly or partly owned or controlled by any person or entity on the SDN List, including, without limitation by virtue of such person being a director or owning voting shares or interests in an entity on the SDN List; (iv) a person or entity acting, directly or indirectly, for or on behalf of any person or entity on the SDN List; or (v) a person or entity acting, directly or indirectly, for or on behalf of a foreign government that is the target of the OFAC sanctions regulations such that the entry into this Agreement would be prohibited under U.S. law.
- 21.8 Franchisee must comply with, and assist to the fullest extent possible BNC's efforts to comply with, the Anti-Terrorism Laws (as defined below). Franchisee will not hire or otherwise deal with any person listed on the SDN List, as it may be modified from time to time. Franchisee is solely responsible for determining actions Franchisee must take to comply with all Anti-Terrorism Laws. Franchisee specifically acknowledges and agrees that Franchisee's indemnification obligations under this Agreement apply to Franchisee's obligations under Section 21.7 and this Section 21.8. Any misrepresentation by Franchisee under this Section 21.8, or any violation of any Anti-Terrorism Laws by Franchisee, Franchisee's owners, principals or employees, will constitute grounds for immediate termination without opportunity to cure of this Agreement and any other agreement between Franchisee and BNC or BNC's affiliates.
Source: Item 23 — Receipts (FDD pages 74–576)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, dealing with individuals or entities on the SDN (Specially Designated Nationals) List can lead to serious repercussions, including the termination of the franchise agreement. Benihana requires franchisees to comply with anti-terrorism laws and to avoid any association with individuals or entities on the SDN List.
The franchise agreement explicitly states that if a franchisee is partly or wholly owned or controlled by anyone on the SDN List, it is a violation of the agreement. This includes scenarios where a person on the SDN List is a director or owns voting shares in the franchisee's entity. The agreement also prohibits franchisees from engaging in business transactions with entities controlled by individuals or entities on the SDN List.
Any misrepresentation or violation of anti-terrorism laws by the franchisee, its owners, principals, or employees provides grounds for immediate termination of the Benihana franchise agreement, without any opportunity to rectify the situation. This strict policy underscores the importance Benihana places on adhering to legal and ethical standards, particularly concerning national security and anti-terrorism measures. Franchisees must ensure they conduct thorough due diligence to comply with these requirements and avoid potential violations.