What rules must Benihana, Benihana's Bank, and the Franchisee's Bank comply with regarding the automatic payment service?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
If any inspection, review or audit reveals that Franchisee understated any payments in any report submitted to BNC, then BNC shall have the right to immediately debit from Franchisee's bank account or require Franchisee to immediately pay the amount understated to BNC, as well as interest from the date such amount was due until debited or paid, at the rate of 18% per annum, or the maximum rate permitted by law, whichever is less.
If an inspection, review or audit discloses an understatement in any report of 3% or more, BNC may, in addition to repayment of monies owed with interest, debit from Franchisee's bank account or require Franchisee to reimburse BNC for any and all costs and expenses incurred by BNC in connection with the inspection, review or audit, including, without limitation, travel, lodging, wages and reasonable accounting and legal costs.
The foregoing remedies shall be in addition to any other remedies BNC may have under this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
Based on the 2024 Benihana Franchise Disclosure Document, if an inspection, review, or audit reveals that a franchisee understated any payments in a report submitted to Benihana, Benihana has the right to immediately debit the amount understated from the franchisee's bank account. Benihana can also require the franchisee to immediately pay the amount understated. Interest will be applied from the date the amount was due until it is debited or paid, at a rate of 18% per annum, or the maximum rate permitted by law, whichever is less.
Furthermore, if an inspection, review, or audit reveals an understatement in any report of 3% or more, Benihana may debit the franchisee's bank account or require the franchisee to reimburse Benihana for all costs and expenses incurred during the inspection, review, or audit. These costs include travel, lodging, wages, and reasonable accounting and legal costs.
These remedies are in addition to any other remedies Benihana may have under the Franchise Agreement. The FDD does not specify any particular rules or requirements that Benihana's bank or the franchisee's bank must follow in relation to the automatic payment service, other than Benihana's right to debit the franchisee's account for underpayments and audit-related expenses under certain conditions.