What constitutes 'Confidential Information' regarding the Benihana System that a franchisee is prohibited from divulging during and after the Franchise Term?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
18.4 Franchisee will not, during the Franchise Term or thereafter, communicate, divulge, or use for the benefit of any other person, persons, partnership, association, limited liability company or corporation any confidential information, proprietary information, knowledge, or know-how concerning the Restaurant and the BENIHANA System, including, without limitation, recipes, products, proprietary formulations, technology, operational details, advertising techniques and any and all information, knowledge, know-how and techniques BNC designates as confidential, including the Operations Manual, the BENIHANA Standards and the BENIHANA System, which may be communicated to Franchisee or of which Franchisee may be apprised by virtue of Franchisee's training and/or operation of the Restaurant ("Confidential Information").
18.4.1 Confidential Information does not include information Franchisee can demonstrate came to Franchisee's attention before BNC's disclosure; or which, at or after the time of disclosure by BNC to Franchisee, had become or later becomes a part of the public domain, through publication or communication by others.
18.4.2 Franchisee will divulge Confidential Information only to such of Franchisee's employees as must have access to it in order to operate the Restaurant.
18.4.3 As a condition of employment, Franchisee must require Franchisee's General Manager, any other personnel employed by Franchisee who has received or will receive training from BNC, and any personnel having access to any Confidential Information to execute covenants that they will maintain the confidentiality of information they receive in connection with their employment at the Restaurant.
At BNC's option, BNC may require that such confidentiality and restrictive covenant agreements be in the form attached to this Agreement as Exhibit F, which form includes specific identification of BNC as a third-party beneficiary of such covenants with the independent right to enforce them.
Franchisee must provide BNC with a copy of all executed covenants within five (5) days after hiring any such General Manager or other employees.
Source: Item 23 — Receipts (FDD pages 74–576)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, franchisees are prohibited from divulging 'Confidential Information' concerning the Benihana system during and after the franchise term. This information includes, without limitation, recipes, products, proprietary formulations, technology, operational details, advertising techniques, and any information Benihana designates as confidential. This also encompasses the Operations Manual, the Benihana Standards, and the Benihana System itself, which the franchisee may learn through training or operation of the restaurant.
This confidentiality extends to the franchisee's employees, as they must also maintain the confidentiality of information they receive during their employment. Benihana may require that employees, such as the General Manager or those receiving training, sign confidentiality and restrictive covenant agreements, with Benihana named as a third-party beneficiary with the right to enforce these covenants. Franchisees must provide Benihana with copies of these executed agreements within five days of hiring such employees.
However, information is not considered confidential if the franchisee can demonstrate it was already known before Benihana's disclosure or if it becomes part of the public domain through no fault of the franchisee. Similarly, information disclosed under a final, unappealable court order, where no protective order is available, is also excluded from the definition of Confidential Information. This ensures that franchisees are not penalized for information they already possessed or information that is legally required to be disclosed.