For a final judgment against a Benihana franchisee, how long can it remain unsatisfied before it constitutes a default under the franchise agreement?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
- (e) A final judgment against Franchisee remains unsatisfied of record for thirty (30) days or longer (unless a supersedeas or other appeal bond is filed), execution is levied against Franchisee's business or property at the Location, or a suit to foreclose any lien or mortgage against the Restaurant premises or any furniture, fixtures or equipment at the Restaurant is filed against Franchisee and not dismissed within thirty (30) days.
The cure period for an act of default under this provision is five (5) days after notice by BNC following expiration of any other period set forth in the provision.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, a final judgment against a franchisee that remains unsatisfied for 30 days or longer constitutes a default under the franchise agreement. However, this is contingent on the franchisee not filing a supersedeas or other appeal bond. If such a bond is filed, it may prevent the judgment from triggering a default.
Additionally, if execution is levied against the franchisee's business or property at the restaurant location, or if a suit to foreclose any lien or mortgage against the restaurant premises, furniture, fixtures, or equipment is filed and not dismissed within 30 days, it also constitutes a default.
Benihana allows a cure period of five days after notice by BNC following the expiration of the initial 30-day period. This means that if a judgment remains unsatisfied for 30 days and no appeal bond is filed, Benihana can issue a notice, and the franchisee has an additional five days to satisfy the judgment to avoid further default consequences. This relatively short cure period underscores the importance of franchisees managing their financial and legal obligations promptly to avoid jeopardizing their franchise agreement.