If Benihana debits a franchisee's account for more than the Royalties and Advertising Contributions actually owed, how does Benihana handle the excess amount?

According to Benihana's 2024 Franchise Disclosure Document, if Benihana debits a franchisee's account for an amount exceeding the Royalties and Advertising Contributions actually owed, Benihana will credit the excess amount. This credit will be applied against the amount Benihana would otherwise debit from the franchisee's account during the following month. This process occurs after the franchisee's actual Gross Sales have been determined.

This policy is relevant when a franchisee fails to submit a Gross Sales Statement to Benihana in any month. In such cases, Benihana is entitled to debit the franchisee's business operating account for 120% of the previous month's Royalties and Advertising Contributions. This is a measure to ensure timely payments and reporting. Once the actual Gross Sales are determined, any discrepancies are reconciled.

For a prospective Benihana franchisee, this means that overpayments due to estimated debits are not lost but are applied to future obligations. It is important for franchisees to maintain accurate sales records and submit Gross Sales Statements on time to avoid estimated debits and potential overpayments. Understanding this process ensures that franchisees can manage their finances effectively and reconcile any discrepancies with Benihana in a timely manner.