What happens if a Benihana franchisee fails to submit Gross Sales Statements?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
s Agreement, "Gross Sales" means all revenue from the sale of products and services and all other income of every kind and nature related to the Restaurant, whether for cash, trade or barter, by redemption of gift certificates or cards, credit transactions, or otherwise,
regardless of collection, including, without limitation, all revenues derived from catering services, guest parking charges, receipts from mail or telephone orders received at or filled from the Restaurant, deposits not refunded to purchasers, orders taken at the Restaurant that may be filled elsewhere, and payments to Franchisee by any concessionaire, franchisee, or person otherwise in the Restaurant with BNC's approval. "Gross Sales" does not include sales taxes collected by Franchisee from customers for payment to the appropriate taxing authority.
- 7.8 If Franchisee fails to send to BNC a Gross Sales Statement in any month, BNC will, to the extent permitted by applicable law, be entitled to debit Franchisee's business operating account for one hundred twenty percent (120%) of the most recent Royalty and Advertising Contributions paid under this Agreement. If the Royalty and Advertising Contributions debited are less than the Royalty and Advertising Contributions actually owed to BNC (once Franchisee's actual Gross Sales have been determined), Franchisee must pay, and BNC is authorized to debit Franchisee's account for, the balance due. If the Royalty and Advertising Contributions debited are more than the Royalty and Advertising Contributions actually owed to BNC (once Franchisee's actual Gross Sales have been determined), BNC will credit the excess amount debited against the amount BNC otherwise would debit from Franchisee's account during the following month.
- 7.9 Any payment not received by BNC when due under this Agreement will bear interest from the due date until payment at a rate of interest (calculated on a daily basis based upon a 365-day year) equal to the lesser of 18% per annum or the maximum allowed by law (as of the date of non-payment).
ARTICLE 8. BOOKS, RECORDS, AND REPORTS
- 8.1 Franchisee must, on the fifteenth (15th) day of each month (or the next business day if the fifteenth day is Saturday, Sunday, or holiday), deliver to BNC a written statement of Gross Sales for the preceding calendar month ("Gross Sales Statement").
Source: Item 23 — Receipts (FDD pages 74–576)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, franchisees are required to submit a written Gross Sales Statement to Benihana on the fifteenth day of each month (or the next business day if the fifteenth falls on a weekend or holiday), detailing the Gross Sales for the preceding calendar month. This statement must be certified as accurate by the franchisee, a financial officer, or the franchisee's principal accountant.
If a Benihana franchisee fails to send a Gross Sales Statement in any month, Benihana has the right to debit the franchisee's business operating account for 120% of the most recent Royalty and Advertising Contributions paid. If this debit is less than what is actually owed, Benihana is authorized to debit the franchisee's account for the remaining balance. Conversely, if the debit exceeds the actual amount owed, Benihana will credit the excess amount to the franchisee's account during the following month.
Furthermore, failure to submit any Gross Sales Statement or other financial report required under the agreement, or unintentionally filing an inaccurate report, constitutes an act of default. The franchisee has thirty days after notice from Benihana to correct this default. Knowingly submitting a false Gross Sales Statement is also an act of default, but there is no cure period for this violation. Any payment not received by Benihana when due will accrue interest from the due date until payment is made, at a rate equal to the lesser of 18% per annum or the maximum allowed by law.