Is a Benihana franchisee required to sign a Collateral Assignment of Lease with Benihana and their landlord?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
You must obtain our approval of the site for your BENIHANA Restaurant before you acquire the site. You must also obtain our approval of any contract of sale or lease for the BENIHANA Restaurant before you sign the contract or lease. At our request, you and your landlord must sign a Collateral Assignment of Lease with us (Exhibit D to the Franchise Agreement) which assigns your lease to us under certain circumstances, including if your Franchise Agreement is terminated.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 28–33)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, a franchisee is required to obtain Benihana's approval of the site for their restaurant before acquiring it. Furthermore, Benihana must approve any contract of sale or lease before the franchisee signs it.
At Benihana's request, the franchisee and their landlord must sign a Collateral Assignment of Lease with Benihana. This agreement, outlined in Exhibit D of the Franchise Agreement, assigns the lease to Benihana under specific conditions.
One such condition is the termination of the Franchise Agreement. This means that if the franchise agreement is terminated, the lease for the restaurant location could be transferred to Benihana, giving Benihana control of the restaurant location.