How does Benihana determine the lease term at the lease commencement date?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
The lease term at the lease commencement date is determined based on the non-cancellable period for which we have the right to use the underlying asset, together with any periods covered by an option to extend the lease if we are reasonably certain to exercise that option, periods covered by an option to terminate the lease if we are reasonably certain not to exercise that option, and periods covered by an option to extend (or not to terminate) the lease in which the exercise of the option is controlled by the lessor.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the lease term at the lease commencement date is determined by several factors. These include the non-cancellable period during which the franchisee has the right to use the property. Benihana also considers any periods covered by an option to extend the lease, assuming the franchisee is reasonably certain to exercise that option.
Conversely, the lease term also accounts for periods covered by an option to terminate the lease, but only if the franchisee is reasonably certain not to exercise that termination option. Additionally, Benihana factors in periods covered by an option to extend (or not to terminate) the lease, particularly when the lessor controls the exercise of that option.
In essence, Benihana assesses the lease term by considering the initial non-cancellable period, potential extensions the franchisee is likely to pursue, and potential terminations the franchisee is likely to avoid. This comprehensive approach ensures that the lease term accurately reflects the anticipated duration of the franchisee's occupancy and usage of the property.