What obligations does a Benihana franchisee have upon termination or non-renewal of the franchise agreement?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Franchise Agreement | Summary | |
|---|---|---|---|
| i. | Franchisee's obligations on termination/non renewal | Article 14 | Obligations include immediately ceasing operation of Restaurant, immediately and permanently ceasing all use of the Marks, no longer identifying yourself as our franchisee or former franchisee, immediately ceasing use of Confidential Information and the BENIHANA System, returning the Manual, selling all Restaurant assets to us at our option, completely de-identifying the location as a BENIHANA Restaurant, paying amounts due and, in certain instances, paying a "Termination Fee". |
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, Article 14 of the franchise agreement outlines the obligations of a franchisee upon termination or non-renewal. These obligations include immediately ceasing operation of the Benihana Restaurant. The franchisee must also immediately and permanently cease all use of the Benihana Marks and can no longer identify themselves as a current or former Benihana franchisee.
Additionally, the franchisee is obligated to immediately cease using any Confidential Information and the BENIHANA System. The franchisee must return the Manual. Benihana has the option to purchase all Restaurant assets from the franchisee. The franchisee is responsible for completely de-identifying the location as a Benihana Restaurant.
Finally, the franchisee must pay all outstanding amounts due to Benihana, and in certain situations, the franchisee may be required to pay a "Termination Fee". These stipulations are fairly standard in the franchise industry to protect the brand and ensure a smooth transition after a franchise agreement ends.