What happens if a Benihana franchisee fails to submit a 'Gross Sales Statement' in any month?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
- 7.6 If Franchisee fails to send to BNC a "Gross Sales Statement" (as defined below) in any month, BNC will be entitled to debit Franchisee's business operating account for one hundred twenty percent (120%) of the previous month's Royalties and Advertising Contributions paid under this Agreement. If the Royalties and Advertising Contributions debited are less than the Royalties and Advertising Contributions actually owed to BNC (once Franchisee's actual Gross Sales have been determined), BNC is authorized to debit Franchisee's account for the balance due. If the Royalties and Advertising Contributions debited are more than the Royalties and Advertising Contributions actually owed to BNC (once Franchisee's actual Gross Sales have been determined), BNC will credit the excess amount against the amount BNC otherwise would debit from Franchisee's account during the following month.
- 7.7 Any payments due hereunder not received by BNC on the due date will bear interest at the rate of interest (calculated on a daily basis based upon a 360-day year) equal to the lesser of 18% per annum or the maximum interest rate allowed by law beginning on the first business day after the due date until the date of payment.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, if a franchisee fails to submit a Gross Sales Statement in any month, Benihana has the right to debit the franchisee's business operating account. The debit will be for an amount equal to 120% of the previous month's Royalties and Advertising Contributions. This is to ensure Benihana receives an estimated payment even without the current month's sales data.
Once the actual Gross Sales are determined, if the debited amount is less than what is actually owed, Benihana is authorized to debit the franchisee's account for the remaining balance. This ensures that Benihana receives the correct amount of Royalties and Advertising Contributions based on the actual sales figures. Conversely, if the debited amount is more than what is actually owed, Benihana will credit the excess amount against the amount they would otherwise debit from the franchisee's account during the following month. This acts as a reconciliation, ensuring the franchisee is not overcharged.
In addition to the above, Benihana requires franchisees to deliver a written Gross Sales Statement for the preceding calendar month by the fifteenth of each month. This statement must be certified as accurate by the franchisee, a financial officer, or the franchisee's principal accountant. Any payments due to Benihana not received by the due date will bear interest at a rate equal to the lesser of 18% per annum or the maximum interest rate allowed by law, calculated daily based on a 360-day year, starting the first business day after the due date until payment is made.