Under what conditions can Benihana require the franchisee to assign their lease for the location and restaurant?

According to Benihana's 2024 Franchise Disclosure Document, Benihana may require a franchisee to assign their lease under specific conditions related to the termination or expiration of the franchise agreement. Specifically, Benihana can exercise this option if the franchisee's agreement terminates or expires.

To ensure Benihana has this option, Benihana requires that the franchisee and the landlord execute a collateral assignment of the franchisee's rights under the lease. This collateral assignment, in the form attached as Exhibit D to the agreement, allows Benihana, at its option, to take over all of the franchisee's rights under the lease. This assignment becomes effective upon the termination or expiration of the Franchise Agreement.

This provision protects Benihana by ensuring control over the restaurant location if a franchise agreement ends, allowing for continued operation under a new franchisee or other arrangements. For a prospective franchisee, this means understanding that the lease is not entirely under their control and can be transferred to Benihana under the specified conditions. It is important for the franchisee to carefully review Exhibit D and understand the implications of the collateral assignment before signing the franchise agreement and lease.