Does Benihana state that any violation of Anti-Terrorism Laws by the franchisee's principals is grounds for immediate termination?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
- 21.8 Franchisee must comply with, and assist to the fullest extent possible BNC's efforts to comply with, the Anti-Terrorism Laws (as defined below). Franchisee will not hire or otherwise deal with any person listed on the SDN List, as it may be modified from time to time. Franchisee is solely responsible for determining actions Franchisee must take to comply with all Anti-Terrorism Laws. Franchisee specifically acknowledges and agrees that Franchisee's indemnification obligations under this Agreement apply to Franchisee's obligations under Section 21.7 and this Section 21.8. Any misrepresentation by Franchisee under this Section 21.8, or any violation of any Anti-Terrorism Laws by Franchisee, Franchisee's owners, principals or employees, will constitute grounds for immediate termination without opportunity to cure of this Agreement and any other agreement between Franchisee and BNC or BNC's affiliates.
Source: Item 23 — Receipts (FDD pages 74–576)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the franchise agreement stipulates that any violation of Anti-Terrorism Laws by the franchisee, its owners, principals, or employees constitutes grounds for immediate termination of the agreement. This termination can occur without any opportunity for the franchisee to correct or 'cure' the violation. Benihana also specifies that this immediate termination applies not only to the franchise agreement itself but also to any other agreements between the franchisee and Benihana or its affiliates.
Benihana requires franchisees to fully comply with all Anti-Terrorism Laws and to assist Benihana in its own compliance efforts. Franchisees are prohibited from hiring or dealing with any person listed on the Specially Designated Nationals (SDN) List, which is maintained and updated by the U.S. Department of Treasury. The franchisee bears the sole responsibility for determining the necessary actions to comply with all relevant Anti-Terrorism Laws.
The franchise agreement emphasizes that the franchisee's indemnification obligations extend to their responsibilities under these anti-terrorism provisions. This means that the franchisee is responsible for covering any losses, damages, or legal costs incurred by Benihana as a result of the franchisee's non-compliance. This clause highlights the critical importance Benihana places on adherence to Anti-Terrorism Laws and the potential financial and legal repercussions for franchisees who fail to comply.
This provision is stricter than many standard franchise agreements, which often allow a period to cure a breach of contract before termination. The immediate termination clause underscores the serious nature of Anti-Terrorism Law compliance and the potential risks to Benihana's brand and reputation if a franchisee violates these laws. Prospective franchisees should carefully review these requirements and ensure they have systems in place to maintain full compliance.