What are the requirements for a Benihana franchisee to obtain a Successor Franchise Agreement at the end of the initial franchise term?

According to Benihana's 2024 Franchise Disclosure Document, the initial franchise term is 15 years. The Franchise Agreement does not automatically renew at the end of this term. Instead, Benihana offers an option to qualified franchisees to acquire a new franchise agreement, called a "Successor Franchise Agreement," allowing them to continue operating the restaurant at its current location. The length of this successor term will be equal to the standard term offered to new franchisees at the time of expiration.

To be eligible for a Successor Franchise Agreement, Benihana franchisees must meet several requirements. First, they cannot be in default of any obligation under the Franchise Agreement at the time of expiration, nor can they have been in default within the 24 months prior to expiration. Second, franchisees must have completed any required remodeling of the restaurant or have contracted to do so.

Additionally, franchisees must submit a written application for a Successor Franchise Agreement at least 365 days before the current term expires. They must also sign and return the Successor Franchise Agreement for final approval and execution at least 30 days before the expiration date. The franchisee must meet all of Benihana's then-current legal, financial, and operational standards applicable to new franchisees, as well as the operating standards for the Benihana system.

Finally, the franchisee must provide all other information and documentation reasonably requested by Benihana, pay an administrative fee equal to 20% of the then-current Franchise Fee, and sign a general release of all existing claims against Benihana and its affiliates. These conditions ensure that only franchisees in good standing, who meet the brand's current standards, are offered the opportunity to continue operating under the Benihana name.