If Benihana reinstates or extends the Franchise Agreement, will a franchisee be required to sign a new franchise agreement?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
Reinstatements and Extensions. If any termination or expiration of the Franchise Agreement would violate any applicable law, we may reinstate or extend the term of the Franchise Agreement for the purpose of complying with applicable law, for the duration we state in a written notice to you. Any such reinstatement or extension will not waive any of our rights under the Franchise Agreement, or otherwise modify the Franchise Agreement. To the extent reinstatements or extensions are permitted by us or required by applicable law, you will be required to sign our then-current form of franchise agreement, which may contain materially different terms and conditions than your prior agreement.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 59–65)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, if the company reinstates or extends the Franchise Agreement due to legal requirements, franchisees will be required to sign the then-current form of the franchise agreement. This new agreement may contain terms and conditions that are significantly different from the franchisee's prior agreement.
This condition means that if a franchisee's original agreement is reinstated or extended to comply with the law, they will not simply continue under the old terms. Instead, they must agree to Benihana's current franchise agreement, which could include changes to fees, operating procedures, or other key aspects of the franchise relationship.
For a prospective Benihana franchisee, this highlights the importance of understanding that the terms of the franchise can change over time. Even if an agreement is reinstated or extended, the franchisee may be required to adapt to new conditions that could impact their business operations and profitability. It would be prudent to consult with a legal professional to fully understand the implications of any new franchise agreement.