Under what circumstances might Benihana reinstate or extend the term of a Franchise Agreement?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
Reinstatements and Extensions. If any termination or expiration of the Franchise Agreement would violate any applicable law, we may reinstate or extend the term of the Franchise Agreement for the purpose of complying with applicable law, for the duration we state in a written notice to you. Any such reinstatement or extension will not waive any of our rights under the Franchise Agreement, or otherwise modify the Franchise Agreement. To the extent reinstatements or extensions are permitted by us or required by applicable law, you will be required to sign our then-current form of franchise agreement, which may contain materially different terms and conditions than your prior agreement.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 59–65)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, Benihana may reinstate or extend the term of a Franchise Agreement if the termination or expiration of the agreement would violate any applicable law. In such cases, Benihana can reinstate or extend the term for the duration necessary to comply with the law, as stated in a written notice to the franchisee. This action does not waive any of Benihana's rights under the original Franchise Agreement, nor does it modify the agreement in any other way.
However, the FDD also states that to the extent reinstatements or extensions are permitted by Benihana or required by applicable law, the franchisee will be required to sign Benihana's then-current form of franchise agreement. This new agreement may contain materially different terms and conditions than the franchisee's prior agreement.
This means that while Benihana may be obligated to extend or reinstate a franchise agreement to comply with the law, franchisees should be aware that they may be required to operate under a new franchise agreement with potentially different terms. Prospective franchisees should consult with legal counsel to understand the implications of any new franchise agreement presented by Benihana during a reinstatement or extension.