For a Benihana franchise, who are considered 'Principals' under the Franchise Agreement?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
. In this Disclosure Document, we refer to the person or entity that will be signing the Franchise Agreement (defined below) as "you" or "your," which, if you are a corporation, partnership, or other entity, includes all franchise owners, members, or partners ("Principals").
Our principal place of business is 1624 Market Street, Suite 311, Denver, Colorado 80202.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 57–58)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, if the franchisee is a corporation, partnership, or other entity, the term 'Principals' includes all franchise owners, members, or partners. This definition is important because these individuals may have specific obligations and responsibilities under the Franchise Agreement.
Specifically, if the franchisee is a legal entity, the Principals are required to sign personal guaranty agreements. These agreements make them individually bound by the obligations of the franchisee under the Franchise Agreement. This means that the personal assets of the Principals could be at risk if the Benihana franchise fails to meet its financial or contractual obligations.
This requirement is fairly standard in the franchise industry, as franchisors often seek personal guarantees from the owners or partners of a franchisee entity to ensure accountability and commitment to the business. Prospective Benihana franchisees should carefully review the personal guaranty agreements and understand the full extent of their personal liability before signing the Franchise Agreement.