Within how many days after termination does BNC have the option to purchase the Benihana franchisee's furnishings, equipment, signs, supplies, or inventory?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
- (m) BNC shall have the option, to be exercised within thirty (30) days after termination, to purchase from Franchisee any or all of Franchisee's furnishings, equipment, signs, fixtures, supplies, or inventory related to the operation of the Restaurant, at a price equal to Franchisee's cost or fair market value, whichever is less.
If the parties cannot agree on a fair market value within a reasonable time, BNC will designate an independent appraiser, whose determination shall be binding.
If BNC elects to exercise any option to purchase herein provided, it shall have the right to set off all amounts due from Franchisee, and the cost of the appraisal, if any, against any payment therefor.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, BNC, which is presumably Benihana National Corp., has the option to purchase a franchisee's furnishings, equipment, signs, fixtures, supplies, or inventory related to the restaurant's operation. This option must be exercised within 30 days after the termination of the franchise agreement. The purchase price will be the lesser of the franchisee's cost or the fair market value of the items.
If Benihana and the franchisee cannot agree on a fair market value, Benihana will designate an independent appraiser to determine the value, and this determination will be binding. Benihana also has the right to offset any amounts owed by the franchisee, as well as the cost of the appraisal, against any payment for the purchased items.
This clause is important for a prospective franchisee to understand because it outlines the terms under which Benihana can acquire the restaurant's assets after the franchise agreement ends. It ensures that the franchisee is compensated for their assets, but also gives Benihana control over maintaining brand standards and continuity by potentially re-using or disposing of the existing furnishings and equipment. The franchisee should be aware of how the fair market value will be determined and the potential for offsets against the purchase price.