Under what conditions is the cure period stayed for a Benihana franchisee who violates a governmental law, ordinance, rule, or regulation?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
- 13.2.19 Franchisee violates any governmental law, ordinance, rule, or regulation in connection with operating the Restaurant, and Franchisee fails to correct the violation within twenty (20) days after notification by the governmental body or authority.
The cure period for an act of default under this provision is five (5) days from notice by BNC to Franchisee, after expiration of the twenty (20) days from notification by the governmental body or authority; provided, however, the five (5) day cure period will be stayed if Franchisee raises a bona fide dispute as to the validity of the alleged violation of the legality of the law, ordinance, rule, or regulation at issue, and Franchisee takes action in an appropriate court or other forum to address the dispute.
Source: Item 23 — Receipts (FDD pages 74–576)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, a franchisee typically has five days to correct a violation of any governmental law, ordinance, rule, or regulation after receiving notice from Benihana, which follows an initial 20-day notification from the governmental body. However, this five-day cure period can be temporarily paused, or 'stayed,' under specific conditions.
The cure period is stayed if the Benihana franchisee raises a legitimate dispute regarding the validity of the alleged violation or the legality of the law, ordinance, rule, or regulation in question.
To qualify for the stay, the franchisee must also take action in an appropriate court or other formal setting to address and resolve the dispute. This means simply disagreeing with the violation is not enough; the franchisee must actively pursue legal or administrative remedies to challenge the violation.