Does Benihana require franchisees to conduct an independent investigation of the franchised business?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
court under this Section 15, Franchisee and BNC agree they will not contest or challenge the in personam jurisdiction or venue of the 11th Judicial Circuit.
15.3.3 Franchisee acknowledges that Franchisee's failure to comply fully with any of the terms of this Agreement respecting Franchisee's obligations to cease, upon termination of expiration of this Agreement, any use of or affiliation with the Marks or the BENIHANA System would cause irreparable damage to BNC and BNC's other franchisees, and that BNC has the immediate right to seek a preliminary order or injunction enforcing those obligations during the pendency of all arbitration or other proceedings, based on the posting of a bond in the amount of Five Thousand Dollars ($5,000.00). This covenant is independent, severable, and enforceable notwithstanding any other rights or remedies BNC may have.
ARTICLE 16. INDEPENDENT CONTRACTOR
- 16.1 Franchisee acknowledges and agrees it is an independent contractor and is not an agent, partner, joint venturer, joint employer, or employee of BNC or any BNC affiliate, and no fiduciary relationship exists between the parties.
- 16.2 Franchisee will be the sole and exclusive employer of its employees, with the sole right to hire, discipline, discharge and establish wages, hours, benefits, employment policies, and other terms and conditions of employment for its employees without consultation or approval from
- BNC. BNC will have no control over the terms and conditions of employment of Franchisee's employees.
- 16.3 Franchisee will have no right to bind or obligate BNC, Benihana, Inc., or Benihana of Tokyo in any way; nor may Franchisee represent that it has any right to do so.
- 16.4 In all public records and in Franchisee's relationships with other persons, including on stationery, business forms, and checks, Franchisee will indicate independent ownership of the Restaurant and that Franchisee operates the Restaurant under a franchise license granted by BNC.
Source: Item 23 — Receipts (FDD pages 74–576)
What This Means (2024 FDD)
The 2024 Franchise Disclosure Document for Benihana does not explicitly state that franchisees are required to conduct an independent investigation of the franchised business. However, Benihana franchisees operate as independent contractors, as stated in Article 16.1: 'Franchisee acknowledges and agrees it is an independent contractor and is not an agent, partner, joint venturer, joint employer, or employee of BNC or any BNC affiliate, and no fiduciary relationship exists between the parties.' This designation typically implies that franchisees are responsible for making their own business decisions and assessing the risks and opportunities associated with the franchise.
While the FDD does not mandate a formal independent investigation, it does emphasize the franchisee's responsibility to comply with all applicable laws and regulations. According to Item 23, 'Franchisee must operate the Restaurant in compliance with all applicable local, state, and federal laws, and compliance with those laws is a requirement of compliance with the BENIHANA Standards and the BENIHANA System.' This suggests that franchisees should conduct their own due diligence to ensure they meet these requirements.
Prospective Benihana franchisees should consider consulting with legal and financial professionals to evaluate the franchise opportunity and understand their obligations. Although not explicitly required, conducting an independent investigation would be a prudent step for any potential franchisee to ensure they are fully informed before entering into a franchise agreement. This is a common practice in the franchise industry, as it allows franchisees to make informed decisions and protect their investment.