Is a Benihana franchisee required to participate in Benihana's specified program for sales reporting and payment of royalties and advertising contributions?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
hould arise between the parties hereto regarding Royalties or Advertising Contributions, until such audit, review, inspection or controversy is terminated. All books and records relating to operation of the Restaurant shall be maintained at the Restaurant or, with BNC's prior written consent, at Franchisee's main offices.
- 8.5 BNC or its authorized representative at all reasonable times shall have the right to inspect, audit, photocopy and/or examine all of Franchisee's books, records and tax returns, including without limitation, Franchisee's general ledger, its balance sheets, its profit and loss statements and its stockholder's registry book. BNC shall also have the right, at any time, to have an independent audit made of Franchisee's books and records. If any inspection, review or audit reveals that Franchisee understated any payments in any report submitted to BNC, then BNC shall have the right to immediately debit from Franchisee's bank account or require Franchisee to immediately pay the amount understated to BNC, as well as interest from the date such amount was due until debited or paid, at the rate of 18% per annum, or the maximum rate permitted by law, whichever is less. If an inspection, review or audit discloses an understatement in any report of 3% or more, BNC may, in addition to repayment of monies owed with interest, debit from Franchisee's bank account or require Franchisee to reimburse BNC for any and all costs and expenses incurred by BNC in connection with the inspection, review or audit, including, without limitation, travel, lodging, wages and reasonable accounting and legal costs. The foregoing remedies shall be in addition to any other remedies BNC may have under this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
Based on the 2024 Benihana Franchise Disclosure Document, franchisees must maintain all books and records related to the Restaurant's operation at the Restaurant itself or, if Benihana provides prior written consent, at the franchisee's main offices. Benihana has the right to inspect, audit, photocopy, and examine all of the franchisee's books, records, and tax returns at any reasonable time. This includes the franchisee's general ledger, balance sheets, profit and loss statements, and stockholder's registry book. Benihana also has the right to have an independent audit made of the franchisee's books and records at any time.
If any inspection, review, or audit reveals that the Benihana franchisee understated any payments in any report submitted to Benihana, Benihana has the right to immediately debit the amount understated from the franchisee's bank account or require the franchisee to immediately pay the amount understated. Benihana will also charge interest from the date such amount was due until it is debited or paid, at a rate of 18% per annum, or the maximum rate permitted by law, whichever is less.
Furthermore, if an inspection, review, or audit reveals an understatement in any report of 3% or more, Benihana may debit from the franchisee’s bank account or require the franchisee to reimburse Benihana for all costs and expenses incurred in connection with the inspection, review, or audit. These costs include travel, lodging, wages, and reasonable accounting and legal costs. These remedies are in addition to any other remedies Benihana may have under the Franchise Agreement. Benihana requires compliance with Payment Card Industry Data Security Standards Requirements ("PCI DSS"), and any other data-related requirements or specifications designated by BNC, at all times during the Franchise Term.