If leasing a location for a Benihana Restaurant, what is required before entering into a lease agreement?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
You must buy or lease the Location at your expense. If you lease the Location, you must obtain our prior written approval before entering into a lease agreement, and you must also provide us with a copy of your fully executed lease agreement immediately after signing. (Franchise Agreement, Section 2.11). We are not required and have no obligation to negotiate the terms of your lease. We may require the inclusion of certain provisions in the lease, including, but not limited to:
- (a) The requirement that you and your landlord sign and deliver to us a collateral assignment of your rights under the lease in the form attached to the Franchise Agreement as Exhibit D, under which you must, at our option, assign all of your rights under the lease to us or our designee upon termination or expiration of the Franchise Agreement.
- (b) A provision restricting the use of the premises solely to the operation of the BENIHANA Restaurant.
- (c) A provision which prohibits you from subleasing or assigning all or any part of your occupancy rights, or extending the term of or renewing the lease, without our prior written consent.
- (d) A provision giving us the right to enter the premises to make modifications necessary to protect the Marks or the BENIHANA System, or to cure any default under the Franchise Agreement.
- (e) A provision requiring the landlord to provide us with written notice of any defaults by you under the lease simultaneously with the issuance of any such notices to you. (Franchise Agreement, Section 2.11).
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 36–47)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, if a franchisee chooses to lease a location for their Benihana restaurant, they must obtain prior written approval from Benihana before entering into any lease agreement. Additionally, the franchisee is required to provide Benihana with a copy of the fully executed lease agreement immediately after signing it. Benihana is not obligated to negotiate the terms of the lease.
Benihana may also require the inclusion of specific provisions in the lease agreement to protect its interests and brand standards. These provisions may include a collateral assignment of the franchisee's rights under the lease to Benihana, a restriction on the use of the premises solely for the operation of the Benihana Restaurant, and a prohibition against subleasing or assigning occupancy rights without Benihana's prior written consent. Benihana may also require a provision granting them the right to enter the premises for modifications or to cure any default under the Franchise Agreement, as well as a provision requiring the landlord to provide Benihana with written notice of any defaults by the franchisee under the lease.
These requirements ensure that Benihana maintains control over the location and operation of its franchised restaurants, even when the franchisee leases the property. This is a common practice in franchising, as it protects the brand's image and ensures consistency across all locations. Prospective franchisees should carefully review these requirements and understand their obligations before entering into a lease agreement for their Benihana restaurant.