In a Benihana franchise agreement assignment, does the assignor guarantee the performance of all obligations by the assignee?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
commitments, duties and liabilities under the Franchise Agreement. Without limiting the foregoing, Assignor irrevocably and unconditionally guarantees to BNC (i) that Assignee will pay all amounts to be paid and otherwise comply with all provisions of the Franchise Agreement and any other agreement between Assignor and BNC or its affiliates concerning the operation of the Franchised Business, and (ii) that if Assignee defaults in making any such payments or complying with any such provisions, Assignor shall pay forthwith upon demand all amounts due and owing BNC and all damages that may arise as a result of any such non-compliance.
In the enforcement of any of its rights against Assignor, BNC may proceed as if Assignor was the primary obligor under the Franchise Agreement.
Assignor waives any right to require BNC to first proceed against Assignee or to proceed against or exhaust any security (if any) held by BNC or to pursue any other remedy available to it before proceeding against Assignor.
No dealing between BNC and Assignee shall exonerate, release, discharge or in any way reduce the obligations of Assignor hereunder, in whole or in part, and in particular and without limiting the generality of the foregoing, BNC may modify or amend the Franchise Agreement, grant any indulgence, release, postponement or extension of time, waive any term or condition of the Franchise Agreement, or any obligation of Assignee, take or release any securities or other guarantees for the performance by Assignee of any of its obligations, and otherwise deal with Assignee as BNC may see fit without affecting, lessening or limiting in any way the liability of Assignor.
Notwithstanding any assignment for the general benefit of creditors, bankruptcy, or other act of insolvency by Assignee, and notwithstanding any rejection, disaffirmance, or disclaimer of this Assignment or the Franchise Agreement, Assignor shall continue to be fully liable.
Source: Item 23 — Receipts (FDD pages 74–576)
What This Means (2024 FDD)
According to the 2024 Benihana Franchise Disclosure Document, if an assignor transfers their franchise agreement rights and obligations to an assignee, the assignor provides an irrevocable and unconditional guarantee to Benihana. This guarantee ensures that the assignee will fulfill all payment obligations and comply with every provision outlined in the Franchise Agreement, as well as any other agreements between the assignor and Benihana or its affiliates concerning the operation of the franchised business. Should the assignee fail to meet these obligations, the assignor is responsible for promptly paying all due amounts and covering any damages resulting from the assignee's non-compliance.
Benihana has the right to treat the assignor as the primary obligor under the Franchise Agreement when enforcing its rights. The assignor waives any right to demand that Benihana first pursue action against the assignee, exhaust any security, or pursue other available remedies before seeking recourse from the assignor. Any dealings between Benihana and the assignee do not release or reduce the assignor's obligations.
Specifically, Benihana can modify or amend the Franchise Agreement, grant indulgences, release or postpone obligations, waive terms, or take/release securities without affecting the assignor's liability. Even in cases of assignment for the benefit of creditors, bankruptcy, or rejection of the assignment by the assignee, the assignor remains fully liable. This comprehensive guarantee ensures Benihana's financial and operational interests are protected, even after the franchise agreement has been assigned.