What does the Guarantor of a Benihana franchise agree to guarantee regarding the Franchisee's obligations?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
FRANCHISEE with FRANCHISOR (all of the aforementioned agreements are collectively referred to as the "BENIHANA Agreements").
-
- GUARANTOR's Covenants, Representations and Guaranty. In consideration of and as an inducement to the execution of the Franchise Agreement by FRANCHISOR, Guarantor hereby personally, irrevocably and unconditionally:
- (a) represents and warrants to FRANCHISOR that the exhibits/attachments to the Franchise Agreement are accurate and complete;
- (b) agrees to guarantee the prompt payment and performance of all of FRANCHISEE's Obligations (as hereinafter defined) to FRANCHISOR and FRANCHISOR's successors and assigns; and
- (c) agrees to be personally bound by, and personally liable for the breach of each and every provision in the Franchise Agreement and each and every provision in any of the BENIHANA Agreements, as if GUARANTOR were the FRANCHISEE.
The term "Obligations" means the payment of all of FRANCHISEE's debts, liabilities, and obligations to FRANCHISOR arising under the BENIHANA Agreements, whether direct, indirect, absolute, contingent, matured or unmatured, extended or renewed, wherever and however incurred, together with all costs of collection, compromise and enforcement, including reasonable attorney's fees, and the prompt performance of each and every covenant, agreement, and condition set forth in any of the BENIHANA Agreements.
3. Waivers by GUARANTOR. GUARANTOR hereby waives:
- (a) acceptance and notice of acceptance by FRANCHISOR of the foregoing Guaranty;
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the Guarantor plays a critical role in ensuring the financial and operational commitments of the franchisee are met. The Guarantor irrevocably and unconditionally agrees to guarantee the prompt payment and performance of all of the franchisee's obligations to Benihana and its successors or assignees. This obligation extends to all debts, liabilities, and responsibilities arising from the 'BENIHANA Agreements'.
The 'Obligations' include all debts, liabilities, and obligations to Benihana arising under the BENIHANA Agreements, encompassing direct, indirect, absolute, contingent, matured, or unmatured debts, as well as extended or renewed debts, regardless of where or how they were incurred. It also covers the costs of collection, compromise, and enforcement, including reasonable attorney's fees, and the prompt fulfillment of every covenant, agreement, and condition outlined in any of the BENIHANA Agreements.
Furthermore, the Guarantor agrees to be personally bound by and liable for any breach of the Franchise Agreement and any of the BENIHANA Agreements, as if the Guarantor were the franchisee. This includes a number of waivers such as waiving any right to require that an action be brought against the franchisee or any other person as a condition of the Guarantor's liability. The Guarantor's liability is not contingent upon Benihana pursuing remedies against the franchisee or any other person. This ensures that Benihana has recourse to the Guarantor directly, without needing to exhaust other options first.