Does Benihana require franchisees to obtain BNC's approval of all insurance contracts before entering into them?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
- 12.3 Franchisee must provide to BNC certificates of insurance for all issued insurance policies Franchisee is required to obtain under Article 12 immediately after issuance.
Franchisee must also provide to BNC copies of all amendments, notices of cancellations, or cancellations of such policies.
12.3.1 If Franchisee fails to obtain or maintain in force any insurance required under this Agreement, BNC has the right, but not the obligation, to purchase such insurance and, if BNC does so, Franchisee must promptly pay to BNC upon demand 105% of the cost of the insurance purchased by BNC to reimburse BNC for the insurance cost and its administrative expense related to Franchisee's failure to comply with Article 12.
12.4 Franchisee agrees, during and after the Franchise Term, to indemnify, defend, and hold harmless BNC and its affiliates and their respective stockholders, members, agents, officers and directors, from and against any and all losses, costs, damages, expenses, claims, demands, proceedings, suits, and liabilities, including attorneys' fees and costs, arising directly or indirectly from, as a result of, or in connection with the construction, operation, condition, use or occupancy of the Restaurant.
12.4.1 If the indemnity provided herein arises in connection with a claim made by a third party ("Third-Party Claim") in respect of a Material Claim (as defined below), BNC has the right, but not the obligation, to take any action it may deem necessary, in its sole discretion, to protect or defend itself and the persons and entities indemnified against any such Third-Party Claim, without regard to the expense, forum, or other parties that may be involved.
12.4.2 BNC also has the right, but not the obligation, to exercise sole and exclusive control over the defense of any Third-Party Claim arising in respect of a Material Claim, and over the settlement, compromise or other disposition thereof, as well as the right to be represented by counsel of its own choosing.
Source: Item 23 — Receipts (FDD pages 74–576)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, franchisees are not explicitly required to obtain BNC's approval of insurance contracts before entering into them. However, Benihana franchisees must provide certificates of insurance for all required insurance policies to BNC immediately after issuance. Additionally, franchisees must also provide copies of all amendments, notices of cancellations, or cancellations of such policies to Benihana.
If a Benihana franchisee fails to obtain or maintain the required insurance, Benihana has the right, but not the obligation, to purchase the insurance. In such cases, the franchisee must promptly pay Benihana 105% of the insurance cost to reimburse Benihana for the insurance and its administrative expenses.
Furthermore, Benihana franchisees agree to indemnify and hold harmless BNC from any losses, costs, damages, and expenses arising from the operation of the Restaurant. Benihana retains the right to take necessary actions to defend itself against any third-party claim and to control the defense of any claim, including the right to be represented by counsel of its choosing.