If a payment to Benihana is voided or rescinded, how does this affect the Guaranty?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
4. Further Agreements and Understandings. GUARANTOR hereby consents and agrees that:
- (d) If any payment or transfer to FRANCHISOR which has been credited against any Obligation is voided or rescinded or required to be returned by FRANCHISOR, whether or not in connection with any event or proceeding described in Section 4(c), this Guaranty will continue in effect or be reinstated as though such payment transfer or recovery had not been made;
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, if any payment or transfer to Benihana is voided, rescinded, or required to be returned, the Guaranty will remain in effect or be reinstated. This applies regardless of whether the voiding or rescission is connected to any event or proceeding related to the Guarantor's insolvency or bankruptcy.
In practical terms, this means that if a franchisee makes a payment to Benihana, and that payment is later reversed for any reason (such as a legal challenge or bank error), the Guarantor's obligations under the Guaranty are not diminished. The Guaranty will continue as if the payment had never been made. This protects Benihana by ensuring that the Guarantor remains liable for the franchisee's obligations, even if payments are later clawed back.
This provision is designed to safeguard Benihana's financial interests and ensure the stability of the franchise agreement. Potential guarantors should understand that their obligations are not reduced by payments that are subsequently reversed. They should be prepared to fulfill their obligations regardless of any fluctuations in the franchisee's payment history.