What does the Benihana franchise agreement state regarding the franchisee's waiver of rights under the United States Bankruptcy Code?

According to Benihana's 2024 Franchise Disclosure Document, the Guarantor's liability under the guaranty is absolute, unconditional, continuing, and unlimited. This remains true regardless of the regularity, validity, or enforceability of any obligations. It also applies irrespective of whether any obligation is limited, modified, voided, released, or discharged in any proceeding under the United States Bankruptcy Code or any similar law affecting the rights of creditors generally.

In simpler terms, even if the franchisee seeks bankruptcy protection, the guarantor's obligations to Benihana remain fully in effect. The guarantor cannot use the franchisee's bankruptcy as a reason to avoid their financial responsibilities to Benihana. This clause ensures that Benihana can still pursue the guarantor for any outstanding debts or obligations, even if the franchisee's business is struggling financially and has filed for bankruptcy.

This is a significant point for potential Benihana franchisees because it means that anyone acting as a guarantor for the franchise agreement (often a principal owner or investor) is taking on a substantial and unwavering financial risk. The guarantor's personal assets could be at stake, even if the franchisee's business fails and seeks bankruptcy protection. Prospective franchisees should carefully consider the implications of this clause and ensure that any guarantors are fully aware of the extent of their financial exposure.