Is Benihana obligated to negotiate the terms of a franchisee's lease agreement?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
ce with the provisions of this Agreement at the Location, and Franchisee shall not relocate the Restaurant without BNC's prior written consent.
- 2.2 Franchisee shall acquire or lease the Location at Franchisee's expense. If Franchisee leases the Location, Franchisee must obtain BNC's prior written approval before entering into a lease agreement. Franchisee shall provide BNC with a copy of Franchisee's fully executed lease agreement immediately after signing. BNC is not required and has no obligation to negotiate the terms of Franchisee's lease. BNC
may require the inclusion of certain provisions in the lease, including, but not limited to:
- (a) The requirement that Franchisee and Franchisee's landlord execute and deliver to BNC a collateral assignment of Franchisee's rights under the lease in the form attached to this Agreement as Exhibit D, pursuant to which Franchisee must, at BNC's option, assign all of Franchisee's rights under the lease to BNC or its designee upon termination or expiration of this Agreement.
- (b) A provision which restricts the use of the premises solely to the operation of a BENIHANA Restaurant.
- (c) A provision which prohibits Franchisee from subleasing or assigning all or any part of Franchisee's occupancy rights, or extending the term of or renewing the lease, without BNC's prior written consent.
- (d) A provision giving BNC the right to enter the premises to make modifications necessary to protect the Marks or the BENIHANA System, or to cure any default under this Agreement.
- (e) A provision requiring the landlord to provide BNC with written notice of any defaults by Franchisee under the lease simultaneously with the issuance of any such notices to Franchisee.
- 2.3 BNC shall make available BNC personnel to consult with Franchisee in the planning, design, construction, and build-out of the Restaurant. Unless otherwise agreed, all consultations will be at BNC's offices in Miami, Florida (or other offices designated by BNC).
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, Benihana is not required to negotiate the terms of a franchisee's lease agreement. The franchisee is responsible for acquiring or leasing the location for their Benihana restaurant at their own expense. If the franchisee chooses to lease, Benihana requires prior written approval before the franchisee enters into any lease agreement. The franchisee must also provide Benihana with a copy of the fully executed lease agreement immediately after signing.
While Benihana does not negotiate the lease terms, they may require the inclusion of certain provisions in the lease agreement to protect their interests. These provisions can include a collateral assignment of the franchisee's rights under the lease to Benihana, restrictions on the use of the premises solely to operate a Benihana restaurant, and prohibitions on subleasing or assigning occupancy rights without Benihana's consent. Benihana may also require provisions that allow them to enter the premises for modifications or to cure defaults, and that the landlord provide Benihana with notice of any franchisee defaults.
Benihana does offer consultation to franchisees during the planning, design, construction, and build-out of the restaurant. Unless otherwise agreed, these consultations will take place at Benihana's offices in Miami, Florida, or other designated locations. This support can be valuable for franchisees as they navigate the site selection and construction process, even though Benihana does not directly negotiate the lease terms.
Prospective franchisees should carefully review any lease agreement with their own legal counsel to ensure they understand all terms and conditions, as well as Benihana's required provisions. Understanding these requirements is crucial for a successful and compliant operation of a Benihana franchise.