During the Transfer Period and any Extension Period for a Benihana franchise, what are the conditions regarding the operation of the Restaurant?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
- 11.6 Upon the death or mental incapacity of any person with an interest in the franchise or in Franchisee (if Franchisee is a corporation, limited liability company or partnership), the executor, administrator, or personal representative of such person shall transfer his or her interest to a third party approved by BNC within six (6) months after such death or mental incapacity (the "Transfer Period").
Such transfers, including, without limitation, transfers by devise or inheritance, shall be subject to the same conditions as an inter vivos transfer.
11.6.1 In the case of transfer by devise or inheritance, if the heirs or beneficiaries of any such person are unable to meet the conditions in this Section 11.6, the personal representative of the deceased person shall have an additional period of up to six (6) months from the date such individual is disapproved by BNC (the "Extension Period") to dispose of the deceased's interest in the franchise.
11.6.2 Notwithstanding the foregoing, the following conditions shall be met during the Transfer Period and any Extension Period: (i) the executor, administrator, or personal representative, as applicable, has provided BNC with documentation reasonably satisfactory to BNC evidencing such person's authority to receive an assignment or to dispose of the deceased's interest in the franchise; (ii) the Restaurant remains open and operating in accordance with all terms and conditions of this Agreements at all times; and (iii) a General Manager who has been approved by BNC and who has completed BNC's Initial Training Program, or In-Restaurant Training, as required by BNC, to BNC's satisfaction is designated to operate the Restaurant during the Transfer Period and/or Extension Period, as applicable.
11.6.3 BNC shall in no way assume any liability in connection with the legal authority of the deceased's executor, administrator, heir, beneficiary or personal representative to receive an assignment or to dispose of the deceased's interest in the franchise.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, if a franchisee dies or becomes mentally incapacitated, their interest in the franchise must be transferred within a specified period. This period is initially six months (the "Transfer Period") and can be extended by up to six months (the "Extension Period") if the heirs or beneficiaries can't meet the transfer conditions.
During both the Transfer Period and any Extension Period, several conditions must be met to ensure the Benihana restaurant continues to operate smoothly. First, the executor, administrator, or personal representative must provide Benihana with satisfactory documentation proving their authority to manage the deceased's interest in the franchise. Second, the restaurant must remain open and fully operational, adhering to all the terms and conditions outlined in the Franchise Agreement.
Finally, a General Manager approved by Benihana must be designated to oversee the restaurant's operations. This General Manager must have completed Benihana's Initial Training Program or In-Restaurant Training, as required by Benihana, to ensure they are qualified to maintain the restaurant's standards during the transition. Benihana assumes no liability regarding the legal authority of the deceased's representative to handle the franchise interest.
These stipulations ensure that even during a transfer of ownership due to unforeseen circumstances, the Benihana restaurant maintains its operational standards and brand integrity, minimizing disruption and protecting the interests of both the franchisor and the franchisee's estate.