Can Benihana reduce the scope of any covenant in the agreement, and if so, what is the condition for this reduction?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
- 18.6 Franchisee understands and acknowledges that BNC has the right, in its sole discretion, to reduce the scope of any covenant set forth in Section 18.5, or any portion thereof, without Franchisee's consent, effective immediately upon Franchisee's receipt of written notice thereof; and Franchisee agrees that it will comply forthwith with any covenant as so modified.
Source: Item 23 — Receipts (FDD pages 74–576)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, Benihana has the right to reduce the scope of any covenant within the franchise agreement. This means Benihana can modify the restrictions or obligations placed on the franchisee.
The condition for this reduction is that Benihana must provide the franchisee with written notice. The reduction becomes effective immediately upon the franchisee's receipt of this notice, and the franchisee is obligated to comply with the covenant as modified. This clause provides Benihana with flexibility to adjust the agreement terms as needed, potentially in response to changing market conditions or other strategic considerations.
For a prospective franchisee, this means that the terms of their franchise agreement, particularly the restrictive covenants, are subject to change at Benihana's discretion. While this provides Benihana with agility, it also introduces an element of uncertainty for the franchisee, who must be prepared to adapt to changes in their obligations. It would be prudent for a potential franchisee to seek clarification on what circumstances might trigger such a modification and how frequently these changes typically occur.