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Can BNC license the Benihana System and Marks for operation of Benihana Restaurants within Special Distribution Opportunities, even within the Restaurant Area?

Benihana Franchise · 2024 FDD

Answer from 2024 FDD Document

  • 1.6 Nothing in this Agreement limits in any way any rights of BNC or its affiliates to: (i) own, operate, or license to others the right to own and operate, competing restaurants other than a BENIHANA Restaurant at any location, including within the Restaurant Area, including but not limited to restaurants using the trademarks RA® SUSHI or HARU®; (ii) own, operate, or license to others the right to own and operate, BENIHANA Restaurants outside the Restaurant Area, even if those BENIHANA Restaurants compete with the Restaurant or draw customers from the Restaurant Area; (iii) directly or indirectly, produce, distribute, sell (at wholesale, retail or otherwise), or license the sale of any product or service using the Marks, or other marks, through alternative channels of distribution (including, by way of example only, grocery stores, convenience stores, internet sales, catalog sales, telemarketing or other direct marketing) regardless of the proximity to, or the competitive impact on, the Restaurant; (iv) license others to use the BENIHANA System and the Marks for the operation of BENIHANA Restaurants within Special Distribution Opportunities (as defined below), including within the Restaurant Area; (v) advertise and promote the BENIHANA System within the Restaurant Area; or (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.

Source: Item 23 — Receipts (FDD pages 74–576)

What This Means (2024 FDD)

According to Benihana's 2024 Franchise Disclosure Document, Benihana, Inc. (BNC) retains specific rights regarding the Benihana System and Marks. The agreement does not limit BNC's rights to license others to use the Benihana System and Marks for operating Benihana Restaurants within Special Distribution Opportunities. This right extends even within the Restaurant Area that is typically protected for the franchisee.

This means that while a franchisee is granted a specific Restaurant Area where BNC typically will not license another traditional Benihana restaurant, this protection does not extend to Special Distribution Opportunities. These opportunities could include venues like airports, universities, or other non-traditional locations.

For a prospective franchisee, this clause indicates that BNC can license Benihana restaurants within their protected territory if it falls under the definition of a "Special Distribution Opportunity." It is important for a potential franchisee to understand what constitutes a "Special Distribution Opportunity" and how it might impact their business. This information is not defined in the provided excerpts and should be clarified with Benihana prior to signing the franchise agreement.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.