What entity guarantees Benihana's duties and obligations under the Franchise Agreement?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
This Guaranty is incorporated and made a part of a Franchise Agreement between FRANCHISEE and Benihana National Corp., a Delaware corporation, whose principal office address is 21500 Biscayne Boulevard, Suite 900, Aventura, Florida 33180 (hereinafter referred to as "FRANCHISOR") on the date specified above, and it will be attached to the Franchise Agreement.
-
- Acknowledgments. GUARANTOR acknowledges and agrees that FRANCHISOR has entered into the Franchise Agreement with FRANCHISEE solely on the condition that each owner of FRANCHISEE be personally obligated and jointly and severally liable with FRANCHISEE (and with each other owner of FRANCHISEE) for the performance of each and every obligation of FRANCHISEE (and its owners) under the Franchise Agreement, any amendments or modifications to the Franchise Agreement, any extensions or renewals of the Franchise Agreement, and under each and every agreement ancillary to the Franchise Agreement, including any lease, that has been or hereafter may be entered by FRANCHISEE with FRANCHISOR (all of the aforementioned agreements are collectively referred to as the "BENIHANA Agreements").
-
- GUARANTOR's Covenants, Representations and Guaranty. In consideration of and as an inducement to the execution of the Franchise Agreement by FRANCHISOR, Guarantor hereby personally, irrevocably and unconditionally:
- (a) represents and warrants to FRANCHISOR that the exhibits/attachments to the Franchise Agreement are accurate and complete;
- (b) agrees to guarantee the prompt payment and performance of all of FRANCHISEE's Obligations (as hereinafter defined) to FRANCHISOR and FRANCHISOR's successors and assigns; and
- (c) agrees to be personally bound by, and personally liable for the breach of each and every provision in the Franchise Agreement and each and every provision in any of the BENIHANA Agreements, as if GUARANTOR were the FRANCHISEE.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 72–73)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the Guarantor, typically each owner of the franchisee, guarantees the franchisee's obligations under the Franchise Agreement. Benihana requires that each owner of the franchisee be personally obligated and jointly and severally liable with the franchisee for the performance of all obligations. This includes obligations under the Franchise Agreement itself, any amendments or modifications, extensions or renewals, and any ancillary agreements such as leases.
The Guarantor's commitment is made in consideration of Benihana entering into the Franchise Agreement. By signing the Guaranty, the Guarantor agrees to guarantee the prompt payment and performance of all the franchisee's obligations to Benihana and its successors or assigns. The guarantor also agrees to be personally bound by and liable for any breach of the Franchise Agreement as if they were the franchisee.
This requirement ensures that Benihana has recourse to the personal assets of the franchisee's owners should the franchisee fail to meet its financial or operational obligations. It is a common practice in franchising to seek personal guarantees, especially from smaller or less established franchisees, to mitigate the franchisor's risk. The personal guarantee provides Benihana with an additional layer of security and recourse beyond the assets of the franchise business itself.