Are Benihana franchisees allowed to engage in business transactions with persons or entities who are the target of U.S. economic sanctions and trade embargoes?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
- 21.5 Anti-Terrorist Activities and Representations.
Franchisee certifies and warrants that neither Franchisee, nor any of Franchisee's owners, principals, employees or associates (including all shareholders, members or partners (as applicable)), are: (i) a person or entity designated by the U.S.
Government on the list of the Specially Designated Nationals and Blocked Persons (the "SDN List"), maintained at http://www.ustreas.gov/offices/enforcement/ofac/sdn by the U.S.
Treasury Department Office of Foreign Assets Control ("OFAC"), with which a U.S. person or entity cannot deal or otherwise engage in business transactions; (ii) a person or entity who is otherwise the target of U.S. economic sanctions and trade embargoes enforced and administered by OFAC, such that a U.S. person or entity cannot deal or otherwise engage in business transactions with Franchisee or Franchisee's shareholders, members or partners; (iii) either wholly or partly owned or partly controlled by any person or entity on the SDN List, including, without limitation by virtue of such person being a director or owning voting shares or interests in an entity on the SDN List; (iv) a person or entity acting, directly or indirectly, for or on behalf of any person or entity
on the SDN List; or (v) a person or entity acting, directly or indirectly, for or on behalf of a foreign government that is the target of the OFAC sanctions regulations such that the entry into this Agreement would be prohibited under U.S. law.
21.6 Franchisee shall comply with and assist BNC to the fullest extent possible in BNC's efforts to comply with the Anti-Terrorism Laws (as defined below). Franchisee shall not hire nor have any dealings with any person listed on the SDN List, as it may be modified from time to time. Franchisee is solely responsible specifically acknowledges and agrees that Franchisee's indemnification obligations under this Agreement pertain to Franchisee's obligations under this Section 21.6. Any misrepresentation by Franchisee under this Section 21.6, or any violation of any Anti-Terrorism Laws by Franchisee, Franchisee's owners, principals or employees, shall constitute grounds for immediate termination of this Agreement and any other agreement Franchisee has entered into with BNC or its affiliates. As used herein, "Anti-Terrorism Laws" means Executive Order 13224 issued by the President of the United States, the Terrorism Sanctions Regulations (Title 31, Part 595 of the U.S. Code of Federal Regulations), the Foreign Terrorist Organizations Sanctions Regulations (Title 31, Part 597 of the U.S. Code of Federal Regulations), the Cuban Assets Control Regulations (Title 31, Part 515 of the U.S. Code of Federal Regulations), the USA PATRIOT ACT, and all other present and future federal, state and local laws, ordinances, regulations, policies, lists and any other requirements of any Governmental Authority (including, without limitation, The United States Department of Treasury Office of Foreign Assets Control) addressing or in any way relating to terrorist acts and acts of war.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, franchisees are prohibited from engaging in business transactions with individuals or entities that are the target of U.S. economic sanctions and trade embargoes. Benihana franchisees must certify and warrant that neither they, nor any of their owners, principals, employees, or associates, are on the U.S. Government's list of Specially Designated Nationals and Blocked Persons (SDN List). They also cannot be a person or entity who is otherwise the target of U.S. economic sanctions and trade embargoes enforced and administered by the OFAC, such that a U.S. person or entity cannot deal or otherwise engage in business transactions with Franchisee or Franchisee's shareholders, members or partners.
This means that Benihana franchisees must conduct due diligence to ensure they are not doing business with any prohibited individuals or entities. This includes checking the SDN List and staying informed about any changes to U.S. sanctions and embargo regulations. Franchisees are also responsible for ensuring that their owners, principals, employees, and associates are not in violation of these regulations.
Failure to comply with these anti-terrorism laws can have severe consequences for a Benihana franchisee. Any misrepresentation or violation of these laws by the franchisee, their owners, principals, or employees constitutes grounds for immediate termination of the Franchise Agreement and any other agreements with Benihana or its affiliates. The franchisee is also responsible for indemnifying Benihana for any losses or damages resulting from their failure to comply with these laws.
This requirement is not unusual in franchising, as franchisors typically want to protect their brand and reputation by ensuring that their franchisees comply with all applicable laws and regulations. Benihana's specific focus on anti-terrorism laws reflects the importance of these regulations and the potential risks associated with non-compliance.