What is the minimum written notice Benihana's insurance company must provide to BNC before changing or canceling the franchisee's policy?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
- 12.3 Every insurance policy issued to Franchisee shall be endorsed so as to require the insurance company to give at least thirty (30) days written notice by registered or certified mail to BNC before changing or canceling the policy, and a certificate of such insurance issued by the insurance companies shall be furnished to BNC. If Franchisee fails to obtain or maintain in force any insurance required under this Agreement, BNC shall have the right, but not the obligation, to purchase such insurance and, if BNC does so, Franchisee shall promptly pay to BNC upon demand 105% of the cost of the insurance purchased by BNC to reimburse BNC for the insurance cost and its administrative expense related to Franchisee's failure to comply with this Section 12.3.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, any insurance policy issued to a franchisee must be endorsed to ensure that the insurance company provides at least thirty (30) days written notice to BNC (Benihana National Corporation) before making any changes to or canceling the policy. This notice must be sent via registered or certified mail.
This requirement protects Benihana by ensuring they are informed of any potential lapse in a franchisee's insurance coverage. This allows Benihana time to take necessary actions to protect their interests, such as requiring the franchisee to obtain new insurance or, if the franchisee fails to do so, purchasing insurance on the franchisee's behalf.
If a Benihana franchisee fails to maintain the required insurance, Benihana has the right, but not the obligation, to purchase the insurance themselves. If Benihana chooses to do so, the franchisee is required to promptly pay Benihana 105% of the insurance cost. This covers Benihana's cost of the insurance and their administrative expenses related to the franchisee's failure to comply with the insurance requirements.