Under what lease classification does Benihana currently lease all of its restaurant locations?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
- 2.2 Franchisee shall acquire or lease the Location at Franchisee's expense. If Franchisee leases the Location, Franchisee must obtain BNC's prior written approval before entering into a lease agreement. Franchisee shall provide BNC with a copy of Franchisee's fully executed lease agreement immediately after signing. BNC is not required and has no obligation to negotiate the terms of Franchisee's lease. BNC
may require the inclusion of certain provisions in the lease, including, but not limited to:
(a) The requirement that Franchisee and Franchisee's landlord execute and deliver to BNC a collateral assignment of Franchisee's rights under the lease in the form attached to this Agreement as Exhibit D, pursuant to which Franchisee must, at BNC's option, assign all of Franchisee's rights under the lease to BNC or its designee upon termination or expiration of this Agreement.
(b) A provision which restricts the use of the premises solely to the operation of a BENIHANA Restaurant.
(c) A provision which prohibits Franchisee from subleasing or assigning all or any part of Franchisee's occupancy rights, or extending the term of or renewing the lease, without BNC's prior written consent.
(d) A provision giving BNC the right to enter the premises to make modifications necessary to protect the Marks or the BENIHANA System, or to cure any default under this Agreement.
(e) A provision requiring the landlord to provide BNC with written notice of any defaults by Franchisee under the lease simultaneously with the issuance of any such notices to Franchisee.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
The 2024 Benihana Franchise Disclosure Document does not specify a particular lease classification that Benihana uses for its restaurant locations. However, it does state that the franchisee is responsible for acquiring or leasing the location for their Benihana restaurant. If the franchisee chooses to lease, they must obtain Benihana's prior written approval before entering into any lease agreement.
Benihana may also require specific provisions to be included in the lease agreement to protect its interests. These provisions may include a collateral assignment of the franchisee's rights to Benihana, restrictions on the use of the premises solely for a Benihana Restaurant, prohibitions on subleasing or assigning the lease without Benihana's consent, the right for Benihana to enter the premises for modifications or to cure defaults, and a requirement for the landlord to notify Benihana of any defaults by the franchisee.
Prospective franchisees should be aware that Benihana's approval of a location does not guarantee the success or profitability of the restaurant. The success of the Benihana restaurant will depend on various factors, including the franchisee's skills, competition, economic conditions, and lease terms. Therefore, it is crucial for franchisees to carefully consider all aspects of the lease agreement and conduct thorough due diligence before committing to a location.