What is the length of the initial franchise term for a Benihana franchise?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Franchise Agreement | Summary | |
|---|---|---|---|
| a. | Length of the Franchise Term | Section 1.3 | Term is 15 years. |
| b. | Renewal or extension of the term ("Successor Franchise Agreement") | Article 17 | The Franchise Agreement does not renew upon the expiration of the Franchise Term. You have an option, subject to meeting certain requirements, to acquire a new franchise agreement ("Successor Franchise Agreement") to operate the Restaurant at the Location for an additional period equal to the standard period of time offered to our franchisees at the time of the expiration of the Franchise Term. |
| c. | Requirements for you to renew or extend | Section 17.2 | At the expiration of the Franchise Term, You must (a) not be in default, or have been in default in the twenty-four (24) months before expiration, in the performance of any obligation under the Franchise Agreement; (b) have re modeled or contracted to re-model the Restaurant to the extent we require; (c) submit to us a written application for a Successor Franchise Agreement at least 365 days before the Franchise Term expires, and sign and return to us for final approval and execution a Successor Franchise Agreement at least 30 days before the Franchise Term expires; (d) meet all of our then-existing legal, financial, and operational standards applicable to new franchisees in the then current form of franchise agreement and the then-current operating standards for the BENIHANA System; (e) submit to us |
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, the initial franchise term is 15 years. Specifically, Section 1.3 of the Franchise Agreement dictates this term length.
Upon expiration of this initial term, the franchise agreement does not automatically renew. However, Benihana offers an option for franchisees to acquire a new franchise agreement, referred to as a "Successor Franchise Agreement," allowing them to continue operating the restaurant at the same location. This successor agreement's term length will be the standard period offered to new franchisees at the time of expiration.
To be eligible for a Successor Franchise Agreement, franchisees must meet several requirements. These include not being in default of the existing agreement, remodeling the restaurant as required by Benihana, submitting a written application well in advance of the expiration date, meeting all then-current legal, financial, and operational standards, providing requested documentation, paying an administrative fee (20% of the then-current Franchise Fee), and signing a general release of claims against Benihana. These conditions ensure that franchisees seeking to extend their relationship with Benihana continue to meet the brand's standards and legal requirements.