Upon termination or expiration of the Benihana Franchise Agreement, what must the franchisee do regarding sums owing to Benihana and its affiliates?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
(i) Franchisee shall promptly pay all sums owing to BNC and its subsidiaries and affiliates.
(j) If this Agreement is terminated as a result of any default under this Agreement, Franchisee shall promptly pay to BNC the Termination Fee (as defined in this Section) in addition to all damages, costs and expenses, including reasonable attorneys' fees, incurred by BNC as a result of the default, which obligation shall give rise to and remain, until paid in full, a lien in favor of BNC against any and all of the personal property, furnishings, equipment, signs, fixtures and inventory related to the operation of the Restaurant.
The "Termination Fee" shall be equal to the aggregate Royalties paid during Franchisee's three (3) fiscal years immediately before the termination date.
If Franchisee has not operated the Restaurant for three (3) fiscal years immediately before the termination date, the Termination Fee shall be equal to the Royalties paid for all full fiscal years completed prior to the termination date divided by the number of such full fiscal years and the result thereof multiplied by three (3).
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, upon termination or expiration of the Franchise Agreement, the franchisee must promptly pay all sums owing to Benihana and its subsidiaries and affiliates.
If the agreement is terminated due to a default by the franchisee, the franchisee must also promptly pay Benihana a Termination Fee, in addition to all damages, costs, and expenses, including reasonable attorneys' fees, incurred by Benihana as a result of the default. This obligation will create a lien in favor of Benihana against any and all of the personal property, furnishings, equipment, signs, fixtures, and inventory related to the operation of the restaurant until it is paid in full.
The Termination Fee is equal to the aggregate Royalties paid during the franchisee's three fiscal years immediately before the termination date. If the franchisee has not operated the restaurant for three fiscal years immediately before the termination date, the Termination Fee will be equal to the Royalties paid for all full fiscal years completed before the termination date, divided by the number of such full fiscal years, with the result multiplied by three.