Under what condition is Benihana willing to consent to the assignment of the Franchise Agreement to the Assignee?

According to Benihana's 2024 Franchise Disclosure Document, Benihana is willing to consent to the assignment of the Franchise Agreement to the Assignee if the Assignor agrees to guarantee the performance by the Assignee of its obligations under the Franchise Agreement. Additionally, the Assignor must continue to be bound by all of the provisions of the Franchise Agreement.

This condition means that even after the assignment, the original franchisee (Assignor) remains responsible for ensuring that the new franchisee (Assignee) fulfills all obligations outlined in the Franchise Agreement. This includes, but is not limited to, financial obligations, operational standards, and adherence to Benihana's brand guidelines. The Assignor's guarantee provides Benihana with an additional layer of security, as they can seek recourse from the original franchisee if the new franchisee fails to meet their obligations.

For a prospective franchisee (Assignor) looking to assign their Franchise Agreement, this condition highlights the importance of carefully selecting a capable and reliable Assignee. The Assignor should conduct thorough due diligence on the Assignee to ensure they have the financial resources, operational expertise, and commitment to uphold the standards of the Benihana brand. Failure to do so could result in the Assignor being held liable for the Assignee's shortcomings, even after the assignment has been completed.

This requirement is not uncommon in franchising, as franchisors often want to ensure continuity and protect their brand standards even when a franchise changes hands. By requiring the original franchisee to guarantee the performance of the new franchisee, Benihana aims to minimize the risk of disruption and maintain the quality and consistency of its restaurants.