Does Benihana select the site for the franchisee's restaurant?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
ise Agreement. (Franchise Agreement, Section 13.2.1).
We do not select your site. However, your location must be approved by us in advance. In approving your site, we consider the general location, size of the property, neighborhood, population, spending habits, food and beverage sales of existing restaurants, traffic pattern, other demographics, other physical characteristics of the site and the lease or purchase terms. At your request, we may assist you in finding an approved location. Our assistance will in no way constitute an assurance, representation or warranty of any kind
as to the suitability of the location of the BENIHANA Restaurant, or for any other purpose. (Franchise Agreement, Section 2.2).
You must buy or lease the Location at your expense. If you lease the Location, you must obtain our prior written approval before entering into a lease agreement, and you must also provide us with a copy of your fully executed lease agreement immediately after signing. (Franchise Agreement, Section 2.11). We are not required and have no obligation to negotiate the terms of your lease. We may require the inclusion of certain provisions in the lease, including, but not limited to:
- (a) The requirement that you and your landlord sign and deliver to us a collateral assignment of your rights under the lease in the form attached to the Franchise Agreement as Exhibit D, under which you must, at our option, assign all of your rights under the lease to us or our designee upon termination or expiration of the Franchise Agreement.
- (b) A provision restricting the use of the premises solely to the operation of the BENIHANA Restaurant.
- (c) A provision which prohibits you from subleasing or assigning all or any part of your occupancy rights, or extending the term of or renewing the lease, without our prior written consent.
- (d) A provision giving us the right to enter the premises to make modifications necessary to protect the Marks or the BENIHANA System, or to cure any default under the Franchise Agreement.
- (e) A provision requiring the landlord to provide us with written notice of any defaults by you under the lease simultaneously with the issuance of any such notices to you. (Franchise Agreement, Section 2.11).
Build-Out and Construction of the BENIHANA Restaurant
We will provide you with our then-current prototypical plans for a typical BENIHANA Restaurant. You must at your own expense employ architects, designers, engineers, and others as necessary to complete, adapt, modify, or substitute the sample plans and specifications and submit them to us for review and approval. We will review the plans and specifications promptly and approve or provide you with comments on the plans and specifications. You may not begin construction of the BENIHANA Restaurant until we approve, in writing, the final plans and specifications to be used in constructing the BENIHANA Restaurant. Once final plans are approved, you must cause the BENIHANA Restaurant to be completed in full compliance with the plans.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 36–47)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, Benihana does not select the site for the franchisee's restaurant. However, the location must be approved by Benihana in advance. Benihana will consider factors such as the general location, size of the property, neighborhood, population, spending habits, food and beverage sales of existing restaurants, traffic pattern, other demographics, other physical characteristics of the site, and the lease or purchase terms. At the franchisee's request, Benihana may assist in finding an approved location.
The franchisee is responsible for buying or leasing the location at their own expense. If leasing, the franchisee must obtain Benihana's prior written approval before entering into a lease agreement and provide a copy of the fully executed lease agreement immediately after signing. Benihana is not required to negotiate the terms of the lease but may require certain provisions to be included, such as a collateral assignment of the franchisee's rights under the lease, restrictions on the use of the premises, prohibitions on subleasing or assigning occupancy rights without prior written consent, the right for Benihana to enter the premises for modifications, and a requirement for the landlord to provide Benihana with written notice of any defaults by the franchisee.
If a franchisee has not secured an approved location before signing the Franchise Agreement, they must do so and open the Benihana Restaurant within 18 months from the date of signing. Failure to find an approved location and open the restaurant within this timeframe gives Benihana the right to immediately terminate the Franchise Agreement. This puts the onus on the franchisee to find a suitable location that meets Benihana's criteria, highlighting the importance of thorough market research and due diligence before signing the agreement.