What is the length of the initial franchise term for a Benihana quick-service restaurant?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
ation"), using the Marks and the BENIHANA System solely in accordance with the BENIHANA Standards and the particular terms of this Agreement.
- 1.3 Unless sooner terminated in accordance with the provisions of this Agreement, this Agreement and the franchise and license granted hereunder shall be for a period ending fifteen (15) years from the date the Restaurant opens for business to the public (the "Franchise Term"). Franchisee agrees to operate the Restaurant in accordance with this Agreement at the Location for the entire Franchise Term.
- 1.3.1 Notwithstanding anything in Section 1.3 above, after the first five years of the Franchise Term, BNC will have the opti
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the initial franchise term for a quick-service Benihana restaurant is fifteen years. Specifically, the agreement lasts for a period ending fifteen years from the date the restaurant opens for business to the public. Benihana requires the franchisee to operate the restaurant at the specified location for the entire franchise term.
However, Benihana retains the option to terminate the franchise agreement after the first five years if the restaurant's average monthly sales fall below $400,000 for any six-month period. Benihana must provide the franchisee with ten days' notice before terminating the agreement under this condition.
This clause provides an early-termination option for Benihana if the quick-service restaurant underperforms, which is a risk for the franchisee. The franchisee should carefully consider the sales projections and market conditions to assess the likelihood of achieving the minimum sales threshold to maintain the franchise for the full fifteen-year term.