How much advance written notice must the insurance company provide to Benihana before changing or canceling a franchisee's insurance 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, Benihana franchisees are required to maintain insurance policies that include a provision for the insurance company to provide written notice to Benihana National Corp. (BNC) at least 30 days before any changes or cancellation of the policy. This notice must be sent via registered or certified mail.
This requirement ensures that Benihana is informed of any potential lapse in a franchisee's insurance coverage, allowing Benihana to take necessary steps to protect its interests. If a franchisee fails to maintain the required insurance, Benihana has the right, but not the obligation, to purchase the insurance on behalf of the franchisee.
If Benihana chooses to purchase insurance for the franchisee, the franchisee is responsible for promptly paying Benihana 105% of the insurance cost. This covers Benihana's expenses, including administrative costs, related to the franchisee's failure to comply with the insurance requirements. This provision underscores the importance of franchisees maintaining continuous and adequate insurance coverage as mandated by Benihana.