Can a Benihana franchisee deal with a person or entity on the SDN List?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
- 21.8 Franchisee must comply with, and assist to the fullest extent possible BNC's efforts to comply with, the Anti-Terrorism Laws (as defined below). Franchisee will not hire or otherwise deal with any person listed on the SDN List, as it may be modified from time to time. Franchisee is solely responsible for determining actions Franchisee must take to comply with all Anti-Terrorism Laws. Franchisee specifically acknowledges and agrees that Franchisee's indemnification obligations under this Agreement apply to Franchisee's obligations under Section 21.7 and this Section 21.8. Any misrepresentation by Franchisee under this Section 21.8, or any violation of any Anti-Terrorism Laws by Franchisee, Franchisee's owners, principals or employees, will constitute grounds for immediate termination without opportunity to cure of this Agreement and any other agreement between Franchisee and BNC or BNC's affiliates.
Source: Item 23 — Receipts (FDD pages 74–576)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, a franchisee is prohibited from dealing with any person or entity listed on the SDN (Specially Designated Nationals) List, which is maintained by the U.S. Department of Treasury. This requirement is part of Benihana's efforts to comply with anti-terrorism laws and regulations. The franchisee is responsible for ensuring they comply with all anti-terrorism laws.
This means that a prospective Benihana franchisee must conduct due diligence to ensure that they do not engage in any transactions or business dealings with individuals or entities on the SDN List. This includes not hiring anyone on the list. Failure to comply with this provision can result in immediate termination of the Franchise Agreement without an opportunity to cure the breach.
Furthermore, the franchisee's indemnification obligations under the Franchise Agreement extend to their obligations regarding compliance with anti-terrorism laws and the prohibition on dealing with parties on the SDN List. Any misrepresentation or violation of anti-terrorism laws by the franchisee, their owners, principals, or employees can lead to immediate termination of the agreement. This highlights the importance of adhering to these regulations to maintain the franchise agreement and avoid potential legal and financial repercussions.