Upon termination or expiration of the Benihana franchise agreement, what specific actions must the franchisee take regarding the Benihana Restaurant operation?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
de. There shall be no cure period for an act of default under this provision.
ARTICLE 14. OBLIGATIONS UPON TERMINATION OR EXPIRATION
- 14.1 Upon termination or expiration of this Agreement for any reason, all rights granted under this Agreement to Franchisee shall immediately terminate, and Franchisee shall strictly comply with the following obligations:
- (a) Franchisee shall immediately cease to operate the Restaurant.
- (b) Franchisee shall immediately and permanently cease to use in any manner the Marks, including, without limitation, the service marks "BENIHANA", "Benihana of Tokyo" and the "flower" symbol, or any confusingly similar trademark, service mark, trade name or insignia.
- (c) Franchisee shall not thereafter directly or indirectly identify itself in any manner as a franchisee of the BENIHANA System or former BNC licensee or franchisee.
- (d) Franchisee shall immediately and permanently cease to use in any manner whatsoever, any Confidential Information, the BENIHANA System, and any of BNC's methods, procedures and techniques associated with the BENIHANA System; the BENIHANA trade dress and distinctive forms, slogans, signs, symbols and devices associated with the BENIHANA System. Without limiting the generality of the foregoing, Franchisee shall cease to use all fixtures, displays, decorations, stationery, forms, advertising materials and other articles used in connection with Franchisee's operation of the Restaurant.
- (e) Franchisee shall immediately make or cause to be made such modifications and alterations to the Location and the Restaurant to distinguish the appearance of the Location and Restaurant from other BENIHANA Restaurants and shall make such specific additional changes thereto as BNC may request for that purpose. If Franchisee fails or refuses to comply with the requirements of this Section 14.1 (e), in addition to any other rights BNC has under this Agreement, BNC shall have the right to enter upon the premises where the Restaurant was operated, without being guilty of trespass or any other tort, for the purpose of making or causing to be made such changes as may be required, at Franchisee's expense, which expense Franchisee agrees to pay upon demand.
- (f) Franchisee shall take all actions necessary to cancel any assumed names or equivalent registrations containing any of the Marks.
- (g) Franchisee shall: (i) at BNC's option, assign to BNC, or its designee, any interest Franchisee has in any lease for the Location and the Restaurant; and (ii) assign to BNC or its designee the telephone numbers used in connection with the operation of the Restaurant by signing a Conditional Assignment of Telephone Numbers substantially in the form attached as Exhibit C hereto. Franchisee shall complete all forms and approvals and perform all acts reasonably necessary to effectuate such assignments.
- (h) Franchisee agrees, if Franchisee continues to operate or subsequently begins to operate any other business, not to use any reproduction, counterfeit, copy or colorable imitation of the Marks or the BENIHANA trade dress, either in connection with such other business or the promotion
thereof, and Franchisee further agrees not to use any designation of origin or description or representation which falsely suggests or represents an association or connection with BNC constituting unfair competition.
- (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.
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 faces several obligations. The franchisee must immediately cease operating the Benihana Restaurant and discontinue using Benihana's trademarks, service marks like "BENIHANA" and "Benihana of Tokyo", and the associated flower symbol. They are also prohibited from identifying themselves as a Benihana franchisee.
Furthermore, the franchisee must cease using any confidential information, the Benihana system, and any of Benihana's methods, procedures, techniques, trade dress, forms, slogans, signs, symbols, and devices. This includes stopping the use of all fixtures, displays, decorations, stationery, forms, and advertising materials connected with the restaurant's operation. The franchisee is also required to modify the location and restaurant to differentiate its appearance from other Benihana restaurants, making specific changes requested by Benihana for this purpose. If the franchisee fails to do so, Benihana has the right to enter the premises and make the changes at the franchisee's expense.
Additionally, the franchisee must cancel any assumed names or equivalent registrations containing any of Benihana's marks. Benihana, at its option, can require the franchisee to assign any interest in the restaurant's lease and assign the telephone numbers used in connection with the restaurant. Finally, the franchisee must promptly pay all sums owed to Benihana and its subsidiaries and affiliates. If the agreement is terminated due to a default, the franchisee must also pay a Termination Fee, which is equal to the aggregate Royalties paid during Franchisee's three (3) fiscal years immediately before the termination date.