Can Benihana reduce the scope of any covenant in the agreement, and if so, what is the condition for this reduction to take effect?
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 reduction can be made without the franchisee's consent.
The reduction in the scope of a covenant takes effect immediately once the franchisee receives written notice from Benihana. The franchisee is then obligated to comply with the covenant as it has been modified.
This clause gives Benihana significant flexibility to adjust the terms of the agreement during its term. For a prospective franchisee, this means that the restrictions and obligations initially agreed upon could become less restrictive at any time, which could be beneficial. However, it also means that Benihana has the power to unilaterally alter these terms, and the franchisee must be prepared to adapt to these changes promptly.