What is EMV chip card technology, and how does it relate to Benihana's liability?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
We estimate that approximately 80% of our sales are by credit or debit cards. Other restaurants and retailers have experienced security breaches in which credit and debit card information has been stolen. We may in the future become subject to claims for purportedly fraudulent transactions arising out of the actual or alleged theft of credit or debit card information, and we may also be subject to lawsuits or other proceedings relating to these types of incidents. Further, in 2015, the major credit card networks shifted the liability associated with EMV (Europay/Mastercard/Visa) chip card technology to the merchants. With this liability shift, any restaurant or merchant that is not using an approved chip-and-pin point-of-sale device would be liable for counterfeit or fraudulent charges.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, EMV chip card technology refers to Europay/Mastercard/Visa chip card technology. In 2015, major credit card networks shifted liability associated with this technology to merchants. This means that if a Benihana restaurant does not use an approved chip-and-pin point-of-sale device, it would be liable for counterfeit or fraudulent charges.
This liability shift has significant implications for Benihana franchisees. It means that franchisees must invest in and maintain point-of-sale systems that are compliant with EMV chip card technology standards. Failure to do so could result in financial losses due to liability for fraudulent transactions. This is especially important considering that approximately 80% of Benihana's sales are made through credit or debit cards.
Benihana franchisees must ensure they are using approved chip-and-pin point-of-sale devices to avoid liability for counterfeit or fraudulent charges. This requirement is part of a broader effort to protect against security breaches and data theft, which Benihana acknowledges as a significant risk due to the increasing frequency and sophistication of cyber incidents. Franchisees should consult with Benihana regarding approved systems and compliance procedures to mitigate this risk.