Is the guarantee from The ONE Group Hospitality, Inc. to Benihana conditional?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
(g) GUARANTOR'S liability under this Guaranty is not be contingent or conditioned upon FRANCHISOR's pursuit or enforcement of any remedies against FRANCHISEE or any other person;
(h) This Guaranty will continue in full force and effect for and as to any extension of or modification or amendment to the Franchise Agreement or any other of the BENIHANA Agreements, and GUARANTOR waives notice of any and all such extensions, modifications, or amendments;
(i) GUARANTOR'S liability will not be diminished, relieved, or otherwise affected by any extension of time, credit, or other indulgence, or any waiver FRANCHISOR may from time to time grant to FRANCHISEE or to any other person, including without limitation, the acceptance of any partial payment or performance, or the compromise or release of any claims (including the release of other owners or Guarantors), or FRANCHISOR taking any action that may have the effect of increasing GUARANTOR'S obligations.
None of those actions or occurrences will in any way modify or amend this Guaranty, which will be continuing and irrevocable during the term of the Franchise Agreement and so long as FRANCHISEE's performance is or may be owed under any of the BENIHANA Agreements and so long as FRANCHISOR may have any cause of action against FRANCHISEE or its owners;
- (j) All present and future debts and Obligations of FRANCHISEE to GUARANTOR or any other GUARANTORS are hereby subordinated to the full payment and performance of the Obligations.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 72–73)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the guarantee from The ONE Group Hospitality, Inc. is explicitly designed to be largely unconditional. The ONE Group Hospitality, Inc., as the Guarantor, is providing a guarantee of Benihana National Corp.'s obligations to its franchisees. This guarantee extends to the franchise registration and the Franchise Agreement itself, including any amendments, modifications, or extensions.
The terms of the guarantee emphasize its continuous and irrevocable nature. Specifically, the guarantor's liability is not contingent upon Benihana pursuing remedies against the franchisee or any other party. This means The ONE Group's obligations under the guarantee are independent of any actions Benihana might take to enforce the Franchise Agreement. Furthermore, the guarantee remains in effect even if there are extensions, modifications, or amendments to the Franchise Agreement, and The ONE Group waives any right to be notified of such changes.
The guarantee's strength is further reinforced by clauses preventing its reduction or alteration due to various factors. These include extensions of time, credit, waivers granted to the franchisee, acceptance of partial payments, compromises, or any actions that might increase the guarantor's obligations. All debts and obligations of the franchisee to the guarantor are subordinated to the full payment and performance of the obligations under the Franchise Agreement. This comprehensive set of stipulations ensures that the guarantee remains robust and enforceable, providing significant security to Benihana franchisees.