What is the duration of the non-compete period for a Benihana franchisee after the franchise term expires or terminates?

According to Benihana's 2024 Franchise Disclosure Document, if a franchisee violates the post-term covenant after the expiration, termination, or transfer of the Franchise Agreement, the post-term covenant period extends for two years.

This means that after a Benihana franchise agreement ends, the franchisee is restricted from engaging in competitive activities for a period of two years. This restriction is designed to protect Benihana's brand, trade secrets, and market position. The franchisee acknowledges that their knowledge of the Benihana business could cause serious injury and loss to Benihana and its franchisees if they were to use this knowledge to benefit a competitor.

The FDD states that the franchisee agrees that the geographical restrictions and term are fair and reasonable and do not impose a greater restraint than necessary to protect the goodwill associated with the Marks or other business interests of Benihana. The franchisee also agrees that their observance of these covenants will not cause undue hardship and will not impair their ability to obtain employment or income.

It is important for prospective franchisees to fully understand the scope and limitations of the non-compete clause before entering into a franchise agreement with Benihana. Franchisees should consider how these restrictions might affect their future business opportunities if they decide to leave the Benihana system.