Can Benihana or its affiliates own or license competing restaurants other than a Benihana Restaurant, such as RA Sushi or HARU, regardless of their proximity to my Benihana Restaurant?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
m of your Franchise Agreement.
We and our affiliates have the right to: (i) own and operate, or license others the right to own and operate, competing restaurants other than a BENIHANA Restaurant at any location, regardless of the proximity to your Restaurant, including but not limited to restaurants using the trademarks RA SUSHI and HARU; (ii) own and operate, or license others the right to own and operate, BENIHANA Restaurants outside the Restaurant Area, even if these BENIHANA Restaurants might compete with the Restaurant or draw customers from the Restaurant Area; (iii) engage, directly or indirectly, at wholesale, retail, or otherwise, in the production, distribution, license, and/or sale of any product or service under the Marks, or other marks, anywhere, regardless of the proximity to, or the competitive impact on, your Restaurant, through alternative channels of distribution (by way of example only, grocery stores, conveniences stores, internet sales, catalog sales, telemarketing, or other direct marketing); (iv) license others to use the BENIHANA System and the Marks for the operation of BENIHANA Restaurants within Special Distribution Opportunities (as defined below); (v) advertise and promote the BENIHANA System within the Restaurant Area; and (vi) purchase, acquire, be acquired by, merge or affiliate with, or engage in any transaction with other businesses (whether or not these businesses are competitive with the Restaurant), including competing franchise systems with units operating in the Restaurant Area, and to convert and operate, or license others the right to operate, these units under the Marks and the BENIHANA System.
"Special Distribution Opportunities" mean captive venue locations, generally available only in connection with third-party food service provision contracts, including, without limitation, airports and other public transportation facilities, turnpikes and toll-roads, entertainment and sports complexes, hotels, casinos, convention centers, and military facilities.
We are not required to pay you if we exercise any of the rights specified above in your Restaurant Area.
As disclosed in Item 1, certain of our subsidiaries operate restaurants offering similar goods and services under the RA SUSHI trademark. We also operate one competing business in Miami, Florida under the trademark SAMURAI®. The RA SUSHI concept offers sushi and a full menu of Pacific Rim dishes targeting a younger demographic in an environment featuring upbeat design elements. RA SUSHI restaurants may compete with BENIHANA Restaurants and with your Restaurant, may be located in your Restaurant Area, and may solicit or accept orders within your Restaurant Area. There are currently twenty RA SUSHI restaurants operating in the United States as of the date of this Disclosure Document. Neither we, nor our affiliates, currently plan to offer franchises for RA SUSHI or SAMURAI restaurants, or any other branded restaurant. However, we expressly reserve the right to do so in the future. There is no mechanism for resolving any conflicts that may arise between your BENIHANA Restaurant and franchised or company-owned RA SUSHI or SAMURAI restaurants. Any resolution of conflicts regarding location, customers, support, or services will be entirely within our business judgment.
Except as disclosed in this Item, neither we, nor our affiliates, currently plan to operate or franchise a business under a different trademark that will sell goods or services similar to those you will offer in the operation of your franchised business. We may, however, do so in the future.
**ITEM 13.
Source: Item 12 — TERRITORY (FDD pages 47–49)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, Benihana and its affiliates retain the right to own, operate, or license competing restaurants, including those using trademarks like RA Sushi and HARU, irrespective of their proximity to a franchisee's Benihana Restaurant. This means that a Benihana franchisee could potentially face direct competition from other restaurant concepts owned or licensed by Benihana, even within the franchisee's designated area.
Specifically, the FDD mentions that certain subsidiaries operate restaurants under the RA Sushi trademark, offering similar goods and services. As of the date of the disclosure document, there were twenty RA Sushi restaurants operating in the United States. While Benihana does not currently plan to offer franchises for RA Sushi or SAMURAI restaurants, they expressly reserve the right to do so in the future. This creates a risk for franchisees, as Benihana could introduce competing brands into their market at any time.
The FDD also states that there is no formal mechanism for resolving conflicts that may arise between a franchisee's Benihana Restaurant and company-owned or franchised RA Sushi or SAMURAI restaurants. Any resolution of conflicts regarding location, customers, support, or services will be entirely within Benihana's business judgment. This lack of a defined conflict resolution process places significant power in the hands of Benihana and could leave franchisees vulnerable if conflicts arise.
Furthermore, Benihana and its affiliates may operate, or license third parties the right to operate, other types of restaurants within the Restaurant Area (i.e., other than those featuring the teppanyaki or hibachi style of cooking) including, without limitation, Asian-style fast food and sushi restaurants, RA SUSHI restaurants, and bars, or other businesses which may use our trademarks or trade names (but not the names BENIHANA or "BENIHANA OF TOKYO") and may sell or license others to sell food products using such trademarks or trade names on a wholesale or retail basis in the Restaurant Area. This broad reservation of rights means that Benihana could introduce a wide range of competing businesses into a franchisee's area, potentially impacting their revenue and profitability.